3 Undervalued Small Caps In Canada With Insider Action

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The Canadian market has recently experienced significant volatility, with a near 5% pullback in August followed by a strong recovery driven by positive earnings growth and an expanding economy. As the focus shifts from tech heavyweights to broader earnings growth, small-cap stocks are gaining attention for their potential value and insider activity.

Top 10 Undervalued Small Caps With Insider Buying In Canada

Name

PE

PS

Discount to Fair Value

Value Rating

Calfrac Well Services

2.6x

0.2x

37.31%

★★★★★★

Trican Well Service

7.9x

1.0x

10.60%

★★★★★☆

Nexus Industrial REIT

3.5x

3.5x

23.94%

★★★★★☆

Flagship Communities Real Estate Investment Trust

3.5x

3.7x

46.63%

★★★★★☆

Hemisphere Energy

5.7x

2.2x

14.14%

★★★★☆☆

Sagicor Financial

1.3x

0.3x

-42.79%

★★★★☆☆

Primaris Real Estate Investment Trust

11.7x

3.1x

42.26%

★★★★☆☆

VersaBank

10.2x

4.1x

-15.64%

★★★☆☆☆

Cascades

NA

0.2x

-82.95%

★★★☆☆☆

Quarterhill

NA

0.9x

-2261.41%

★★★☆☆☆

Click here to see the full list of 20 stocks from our Undervalued TSX Small Caps With Insider Buying screener.

Let's dive into some prime choices out of from the screener.

Cascades

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Cascades is a company engaged in the production and sale of tissue papers, containerboard packaging products, specialty packaging products, and recovery and recycling activities with a market cap of approximately CA$1.04 billion.

Operations: The company's revenue streams primarily come from Tissue Papers ($1.58 billion), Packaging Products - Containerboard ($2.30 billion), and Packaging Products - Specialty Products ($644 million). The gross profit margin has shown significant variation, reaching as high as 46.46% in Q3 2022 and standing at 34.75% in Q2 2024.

PE: -22.3x

Cascades, a small-cap Canadian company, is drawing attention due to its insider confidence, with Alain Lemaire purchasing 26,500 shares valued at C$255,135 in recent months. Despite challenges such as higher risk funding and interest payments not well covered by earnings, the company's forecasted annual earnings growth of 171.79% highlights potential upside. Recent corporate guidance indicates stronger Q3 results driven by improved Containerboard performance and stable Specialty Packaging outcomes. However, the Tissue Papers segment faces pressure from higher pulp prices and softer pricing.

TSX:CAS Ownership Breakdown as at Sep 2024

Flagship Communities Real Estate Investment Trust

Simply Wall St Value Rating: ★★★★★☆

Overview: Flagship Communities Real Estate Investment Trust operates in the residential real estate sector, focusing on manufactured housing communities, with a market cap of approximately $0.47 billion (CAD).