In the wake of the Bank of Canada's recent rate cut, aimed at countering tariff uncertainties and a contracting economy, Canadian small-cap stocks have become an area of interest for investors seeking potential opportunities on the TSX. As economic indicators suggest a possible rebound and lower borrowing costs, identifying small-cap companies with insider action could be key to uncovering value in this evolving market landscape.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: First National Financial is a Canadian company specializing in mortgage lending, with operations focused on commercial and residential segments, and a market cap of approximately CA$2.68 billion.
Operations: The company generates revenue primarily from residential and commercial segments, with residential contributing significantly more. Over recent periods, the gross profit margin has shown an upward trend, reaching 86.04% in September 2024. Operating expenses have been a substantial part of costs, with general and administrative expenses consistently forming a major component.
PE: 13.4x
First National Financial, a small Canadian company, attracts attention with its insider confidence shown by Stephen J. Smith's purchase of 463,300 shares for C$20.44 million in recent months. Despite relying entirely on external borrowing for funding, the firm maintains consistent dividend payments of C$0.21 per share monthly and forecasts annual earnings growth of 15.68%. While debt coverage remains a concern, these factors suggest potential value in this stock's future prospects amidst Canada's undervalued market segment.
Overview: Savaria is a company that specializes in manufacturing and distributing accessibility solutions, such as stairlifts and wheelchair lifts, with a market capitalization of CA$1.14 billion.
Operations: The company generates revenue primarily from its Patient Care segment, with significant adjustments contributing to the total. Over recent periods, the gross profit margin has shown an upward trend, reaching 36.20% by September 2024. Operating expenses and non-operating expenses are notable cost components impacting net income.
PE: 28.4x
Savaria, a Canadian company in the accessibility industry, shows potential as an undervalued investment. With insider confidence reflected by Marcel Bourassa's recent purchase of 65,000 shares worth approximately C$1.06 million in January 2025, there's a positive signal about its prospects. Despite relying solely on external borrowing for funding and facing large one-off items affecting earnings quality, the company maintains consistent monthly dividends of C$0.045 per share and anticipates annual earnings growth of 31%.
Overview: Winpak is a company that specializes in manufacturing and distributing packaging materials and machinery, with a market capitalization of approximately C$2.63 billion.
Operations: Winpak generates revenue primarily from three segments: Flexible Packaging, Rigid Packaging and Flexible Lidding, and Packaging Machinery. The company has experienced fluctuations in its gross profit margin, reaching 31.12% in the latest period.
PE: 12.4x
Winpak, a Canadian packaging company, has caught attention as a potential undervalued opportunity. Despite relying entirely on external borrowing for funding, which poses higher risks compared to customer deposits, the company's earnings are projected to grow at 5% annually. Insider confidence is evident from recent share purchases by key stakeholders over the past year. Additionally, Winpak announced a special one-time dividend of C$3 per share and a regular dividend of C$0.05 per share payable in January 2025, signaling robust cash flow management and shareholder value focus.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include TSX:FN TSX:SIS and TSX:WPK.
