As global markets navigate a challenging landscape marked by cautious Federal Reserve commentary and political uncertainties, small-cap stocks have been particularly impacted, with indices like the S&P 600 reflecting broader declines. Despite these headwinds, the resilience of certain small-cap companies becomes evident through strategic insider buying, suggesting potential undervaluation and confidence in their long-term prospects amidst current economic conditions.

Top 10 Undervalued Small Caps With Insider Buying

Click here to see the full list of 198 stocks from our Undervalued Small Caps With Insider Buying screener.

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

Tourism Holdings

Simply Wall St Value Rating: ★★★★★☆

Overview: Tourism Holdings is a company engaged in the rental and sales of recreational vehicles across regions including the USA, Canada, UK/Ireland, New Zealand, and Australia, as well as operating manufacturing segments and tourism services; it has a market capitalization of NZ$1.07 billion.

Operations: Tourism Holdings generates revenue primarily through its Australian Rentals, Sales & Manufacturing segment, contributing NZ$376.19 million, followed by the Action Manufacturing Group at NZ$178.50 million and USA Rentals & Sales at NZ$159.41 million. The company's gross profit margin has shown a downward trend from 74.52% in June 2015 to 59.40% in June 2024, reflecting changes in cost of goods sold relative to revenue growth over time.

PE: 11.6x

Tourism Holdings, a small player in the industry, is currently facing challenges with its profit margins dropping from 7.5% to 4.3% over the past year and relying entirely on external borrowing for funding. Despite these hurdles, insider confidence is evident with recent share purchases in October 2024. The company announced a final dividend of A$0.05 per share for FY24 and anticipates earnings growth of 20% annually, suggesting potential future value amidst current financial restructuring efforts.

• Get an in-depth perspective on Tourism Holdings' performance by reading our valuation report here.

• Learn about Tourism Holdings' historical performance.

Proact IT Group

Simply Wall St Value Rating: ★★★★★☆

Overview: Proact IT Group is a company that specializes in data and information management services across various regions including the Nordics & Baltics, UK, West (Belgium and Netherlands), and Central Europe (Czech Republic and Germany), with a market capitalization of SEK 1.85 billion.

Operations: Proact IT Group generates revenue primarily from its operations in the Nordics & Baltics, UK, West, and Central regions. The company's cost of goods sold (COGS) significantly impacts its gross profit margin, which has shown a trend reaching 24.20% as of September 2024. Operating expenses are largely driven by sales and marketing efforts alongside general and administrative costs.

PE: 13.4x

Proact IT Group, a small company with growth potential, is experiencing insider confidence as insiders have been actively purchasing shares. Despite facing higher-risk funding due to reliance on external borrowing, the company has shown resilience under Jonas Hasselberg's leadership. Over nearly seven years, Proact's revenue increased from SEK 3 billion to almost SEK 5 billion, with profits up by 70%. However, they anticipate a sales decline of 10% to 15% in Q4 2024 compared to last year.

• Click to explore a detailed breakdown of our findings in Proact IT Group's valuation report.

• Gain insights into Proact IT Group's historical performance by reviewing our past performance report.

Xingda International Holdings

Simply Wall St Value Rating: ★★★★☆☆

Overview: Xingda International Holdings is engaged in the manufacturing and sale of radial tire cords, bead wires, and other wires, with a market capitalization of approximately HK$3.45 billion.

Operations: The company's primary revenue stream is from the sale of radial tire cords, bead wires, and other wires, with recent revenue reaching CN¥12.24 billion. Over time, the gross profit margin has experienced fluctuations, recently recorded at 19.46%.

PE: 5.7x

Xingda International Holdings, a smaller company in its sector, has recently been the focus of insider confidence as Liu Jinlan proposed to acquire an additional 62.97% stake for HK$1.6 billion in September 2024. Despite having liabilities funded entirely through external borrowing, this move suggests potential growth prospects and insider trust in the company's future. The acquisition offer values shares at HK$1.30 each and aims to secure over 50% voting rights upon completion by November's end, highlighting strategic interest amidst financial challenges.

• Click here to discover the nuances of Xingda International Holdings with our detailed analytical valuation report.

• Gain insights into Xingda International Holdings' past trends and performance with our Past report.

Turning Ideas Into Actions

• Dive into all 198 of the Undervalued Small Caps With Insider Buying we have identified here.
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Want To Explore Some Alternatives?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

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 NZSE:THL OM:PACT and SEHK:1899.

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