Over the last 7 days, the Canadian market has risen 1.2%, and it is up 16% over the last 12 months, with earnings forecasted to grow by 15% annually. In this favorable environment, identifying stocks trading below their intrinsic value can present compelling opportunities for investors seeking to capitalize on potential growth.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Click here to see the full list of 29 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Here's a peek at a few of the choices from the screener.

Boyd Group Services

Overview: Boyd Group Services Inc. operates non-franchised collision repair centers across North America and has a market cap of CA$4.56 billion.

Operations: The company generates $3.04 billion in revenue from automotive collision repair and related services across North America.

Estimated Discount To Fair Value: 39.3%

Boyd Group Services is trading at CA$206.66, significantly below its estimated fair value of CA$340.69, indicating strong potential based on discounted cash flow analysis. Despite recent earnings declines—net income for Q2 2024 was US$10.83 million compared to US$26.27 million a year ago—the company’s revenue and earnings are forecast to grow faster than the Canadian market, with expected annual profit growth at 49.1%. However, interest payments are not well covered by earnings, highlighting a financial risk factor.

• Upon reviewing our latest growth report, Boyd Group Services' projected financial performance appears quite optimistic.

• Dive into the specifics of Boyd Group Services here with our thorough financial health report.

Computer Modelling Group

Overview: Computer Modelling Group Ltd. is a software and consulting technology company that develops and licenses reservoir simulation and seismic interpretation software, with a market cap of CA$969.09 million.

Operations: The company's revenue segments include CA$90.29 million from CMG, with an additional segment adjustment of CA$28.16 million.

Estimated Discount To Fair Value: 47.9%

Computer Modelling Group (CA$11.55) is trading at a significant discount to its estimated fair value of CA$22.18, supported by discounted cash flow analysis. Despite a decline in net income for Q1 2024, the company’s revenue grew substantially to CA$30.52 million from CA$20.75 million a year ago and is forecasted to grow faster than the Canadian market at 11.5% annually. Additionally, CMG's earnings are expected to grow significantly over the next three years, reinforcing its undervaluation based on cash flows.

• Our expertly prepared growth report on Computer Modelling Group implies its future financial outlook may be stronger than recent results.

• Click here to discover the nuances of Computer Modelling Group with our detailed financial health report.

NFI Group

Overview: NFI Group Inc., with a market cap of CA$2.13 billion, manufactures and sells buses across North America, the United Kingdom, Europe, and the Asia Pacific.

Operations: The company's revenue segments consist of Aftermarket Operations generating $599.83 million and Manufacturing Operations contributing $2.47 billion.

Estimated Discount To Fair Value: 50%

NFI Group (CA$18.57) is trading at a substantial discount to its estimated fair value of CA$37.11, reflecting significant undervaluation based on discounted cash flow analysis. The company reported robust Q2 2024 earnings with sales of US$851.23 million, up from US$660.29 million a year ago, and net income of US$2.55 million compared to a net loss previously. Despite interest coverage concerns, NFI's revenue is forecasted to grow at 16.3% annually, outpacing the Canadian market growth rate.

• In light of our recent growth report, it seems possible that NFI Group's financial performance will exceed current levels.

• Take a closer look at NFI Group's balance sheet health here in our report.

Key Takeaways

• Delve into our full catalog of 29 Undervalued TSX Stocks Based On Cash Flows here.

• Shareholder in one or more of these companies? Ensure you're never caught off-guard by adding your portfolio in Simply Wall St for timely alerts on significant stock developments.

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Ready To Venture Into Other Investment Styles?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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:BYD TSX:CMG and TSX:NFI.

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