Over the last 7 days, the United States market has dropped 2.7%, yet it remains up by 11% over the past year, with earnings forecast to grow by 14% annually. In this dynamic environment, identifying stocks that are potentially undervalued while also considering insider activity can be a strategic approach for investors looking to navigate these conditions effectively.

Top 10 Undervalued Small Caps With Insider Buying In The United States

Click here to see the full list of 63 stocks from our Undervalued US Small Caps With Insider Buying screener.

Let's take a closer look at a couple of our picks from the screened companies.

Sinclair

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Sinclair is a diversified media company primarily engaged in local media operations and tennis-related activities, with a market cap of approximately $0.76 billion.

Operations: Sinclair's revenue is primarily derived from its Local Media segment, generating $3.25 billion, with additional contributions from Tennis at $247 million. The company's gross profit margin has shown variability, reaching 49.61% in the latest period. Operating expenses and non-operating expenses significantly influence net income outcomes, which have fluctuated over recent periods.

PE: 3.1x

Sinclair, a player in the broadcasting industry, reported a positive turnaround with US$3.5 billion in revenue and US$310 million net income for 2024, compared to losses the previous year. Despite earnings forecasted to decline by 6.2% annually over three years, insider confidence is evident through share purchases this past January. The company faces high-risk funding due to reliance on external borrowing but continues expanding its media presence with new initiatives like AMP Media and strategic partnerships such as EdgeBeam Wireless.

• Click here and access our complete valuation analysis report to understand the dynamics of Sinclair.

• Understand Sinclair's track record by examining our Past report.

Kennametal

Simply Wall St Value Rating: ★★★★☆☆

Overview: Kennametal is a company specializing in metal cutting and infrastructure solutions, with a market capitalization of approximately $1.96 billion.

Operations: Kennametal generates revenue primarily from its Metal Cutting and Infrastructure segments, with recent figures showing $1.26 billion and $767.31 million respectively. The company's gross profit margin has shown fluctuations, reaching 35.30% in June 2018 before declining to 30.68% by December 2024. Operating expenses have consistently impacted profitability, with general and administrative expenses being a significant component of these costs over the periods analyzed.

PE: 17.7x

Kennametal, a player in the tooling and industrial materials sector, shows signs of being undervalued with insider confidence demonstrated by Sanjay Chowbey's recent US$260,000 purchase of 10,000 shares. Despite facing a lawsuit over alleged trade secret violations, the company projects annual sales between US$1.95 billion and US$2 billion for 2024. Earnings are forecasted to grow by 10.2% annually. Recent share repurchases totaling 1.45% for nearly US$30 million suggest strategic financial maneuvers amidst external borrowing risks and evolving leadership dynamics.

• Delve into the full analysis valuation report here for a deeper understanding of Kennametal.

• Gain insights into Kennametal's historical performance by reviewing our past performance report.

Quanex Building Products

Simply Wall St Value Rating: ★★★★☆☆

Overview: Quanex Building Products is a company that specializes in manufacturing components for the fenestration and cabinet markets, with operations in both North America and Europe, and has a market capitalization of approximately $1.04 billion.

Operations: The company's revenue streams are primarily driven by North American Fenestration at $650.06 million and European Fenestration at $230.71 million, with additional contributions from North American Cabinet Components totaling $198.42 million and Tyman at $203.44 million. The gross profit margin has shown variability, reaching 25.10% in the latest period ending October 2024 after a peak of 25.10% earlier in January 2024, indicating fluctuations over time despite recent improvements compared to prior periods such as July 2023 when it was recorded at 23.19%.

PE: 28.5x

Quanex Building Products, a small player in the building materials industry, recently held its annual meeting, confirming no further activist engagement with Teleios Capital. The company declared a $0.08 dividend per share for March 2025. Despite a drop in net income to US$33 million from US$82.5 million last year, sales grew to US$1.28 billion from US$1.13 billion, hinting at potential recovery prospects amid insider confidence demonstrated by recent share purchases within the past year.

• Get an in-depth perspective on Quanex Building Products' performance by reading our valuation report here.

• Explore historical data to track Quanex Building Products' performance over time in our Past section.

Summing It All Up

• Discover the full array of 63 Undervalued US Small Caps With Insider Buying right here.
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• 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 NasdaqGS:SBGI NYSE:KMT and NYSE:NX.

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