3 Undervalued Small-Cap Stocks on the TSX to Monitor

3 min read | September 24, 2024 06:45 AM AEST | By Team Kalkine Media

The Canadian market has remained relatively stable over the past week, although it has experienced a notable increase of 19% over the past 12 months. Earnings are projected to grow at a rate of 15% per year in the coming years. Within this context, several undervalued Small-cap stocks have emerged, attracting attention due to recent insider buying activity. 

NorthWest Healthcare (TSX:NWH.UN) 

Overview: NorthWest Healthcare Properties Real Estate Investment Trust operates in the healthcare real estate sector, focusing on managing a portfolio that includes medical office buildings, clinics, and hospitals. The REIT has a market capitalization of approximately CA$2.80 billion. 

Operations: The company generates revenue primarily from healthcare real estate, reporting quarterly revenue of CA$523.85 million. The gross profit margin has fluctuated over time, reaching 82.39% in Q3 2021 but dropping to 75.13% in Q2 2023, reflecting variations in cost management efficiency. 

Recent insider activity includes Peter Aghar's purchase of 100,000 shares valued at approximately CA$477,861. Despite reporting a net loss of CA$122.34 million for Q2 2024 and sales of CA$119.14 million, the REIT continues to distribute monthly dividends of CA$0.03 per unit. This consistent dividend strategy indicates stability amid financial challenges, and earnings are forecasted for significant annual growth. 

Trican Well Service (TSX:TCW) 

Overview: Trican Well Service is a Canadian company specializing in oil well equipment and services, with a market cap of CA$1.12 billion. 

Operations: Revenue is generated primarily through the Oil Well Equipment & Services segment, amounting to CA$991.15 million. The company's gross profit margin has exhibited variability, reaching 28.05% in the most recent reporting period. Operating expenses are significant, totaling CA$115.30 million, alongside non-operating expenses of CA$40.21 million. 

In Q2 2024, Trican Well Service reported sales of CA$211.81 million and net income of CA$16.23 million, both showing improvement from the previous year. The company has increased its quarterly dividend by 12.5% to CA$0.045 per share and repurchased 3.71 million shares for CA$16.72 million between April and July 2024. Insider confidence is evident, with Scott Matson acquiring an additional 27,000 shares valued at approximately CA$130,000, reflecting strong internal belief in the company's prospects, despite forecasts suggesting a potential average earnings decline of 3% annually over the next three years. 

Vermilion Energy (TSX:VET) 

Overview: Vermilion Energy is engaged in oil and gas exploration and production, with a focus on hydrocarbon extraction. The company has a market capitalization of approximately CA$3.50 billion. 

Operations: Revenue for Vermilion Energy is primarily derived from its exploration and production activities, with a reported figure of CA$1.81 billion for the latest period. The net income margin has fluctuated, with a recent figure of -0.4556%, reflecting varying profitability. The gross profit margin has also seen changes, reaching as high as 82.55%, but most recently was recorded at 65.72%. 

Vermilion Energy has demonstrated significant insider confidence, with recent share purchases reported. The company recorded CA$460.97 million in revenue for Q2 2024 and executed a strategic buyback of 3.7 million shares between April and July 2024, amounting to CA$59.8 million. Recent operational updates highlight successful deep gas exploration in Germany and increased production in Croatia, positioning the company for potential growth, despite recent net losses of CA$82.43 million in Q2. 


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