With inflation moving closer to target and central banks potentially easing rates, the Canadian market has seen a flurry of activity despite growth concerns. In this environment, identifying undervalued stocks can be crucial for investors looking to capitalize on market inefficiencies and potential rebounds.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name Current Price Fair Value (Est) Discount (Est) goeasy (TSX:GSY) CA$194.98 CA$351.97 44.6% Amerigo Resources (TSX:ARG) CA$1.62 CA$3.05 46.9% Computer Modelling Group (TSX:CMG) CA$12.54 CA$22.44 44.1% Kinaxis (TSX:KXS) CA$151.75 CA$286.55 47% Viemed Healthcare (TSX:VMD) CA$10.45 CA$20.08 48% Boyd Group Services (TSX:BYD) CA$226.01 CA$399.87 43.5% NFI Group (TSX:NFI) CA$19.16 CA$37.91 49.5% Green Thumb Industries (CNSX:GTII) CA$15.93 CA$30.32 47.5% NanoXplore (TSX:GRA) CA$2.24 CA$4.23 47% TerrAscend (TSX:TSND) CA$1.84 CA$3.22 42.8%

Click here to see the full list of 27 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

We're going to check out a few of the best picks from our screener tool.

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$1.09 billion.

Operations: The company's revenue segments consist of CA$20.79 million from BHV and CA$87.89 million from CMG.

Estimated Discount To Fair Value: 44.1%

Computer Modelling Group (CMG) is trading at CA$12.54, significantly below its estimated fair value of CA$22.44, indicating it may be undervalued based on discounted cash flows. Despite recent insider selling and a dip in quarterly net income to CA$3.96 million from CA$6.9 million last year, earnings are forecast to grow 15.72% annually, outpacing the Canadian market's growth rate of 14.7%.

Our comprehensive growth report raises the possibility that Computer Modelling Group is poised for substantial financial growth. Click to explore a detailed breakdown of our findings in Computer Modelling Group's balance sheet health report. TSX:CMG Discounted Cash Flow as at Aug 2024

Kinaxis

Overview: Kinaxis Inc. offers cloud-based subscription software for supply chain operations across the United States, Europe, Asia, and Canada, with a market cap of CA$4.14 billion.

Operations: The company's revenue from software and programming amounts to $457.72 million.

Estimated Discount To Fair Value: 47%

Kinaxis, currently trading at CA$151.75, is significantly undervalued with an estimated fair value of CA$286.55 based on discounted cash flows. The company reported Q2 2024 sales of US$118.28 million and net income of US$3.43 million, showing substantial improvement from the previous year’s loss. With earnings projected to grow 46.81% annually, Kinaxis is expected to outperform the Canadian market's growth rate of 14.7%.



Upon reviewing our latest growth report, Kinaxis' projected financial performance appears quite optimistic. Click here to discover the nuances of Kinaxis with our detailed financial health report. TSX:KXS Discounted Cash Flow as at Aug 2024

NFI Group

Overview: NFI Group Inc., with a market cap of CA$2.23 billion, manufactures and sells buses across North America, the United Kingdom, Europe, and the Asia Pacific.

Operations: NFI Group Inc. generates revenue from two main segments: Manufacturing Operations, which contribute $2.47 billion, and Aftermarket Operations, which bring in $599.83 million.

Estimated Discount To Fair Value: 49.5%

NFI Group, trading at CA$19.16, is significantly undervalued with an estimated fair value of CA$37.91 based on discounted cash flows. Despite recent dilution, NFI's earnings are forecast to grow 101.91% per year and the company is expected to become profitable within three years. Recent Q2 2024 results showed a net income of US$2.55 million compared to a net loss of US$48.1 million from the previous year, highlighting substantial financial improvement.

According our earnings growth report, there's an indication that NFI Group might be ready to expand. Get an in-depth perspective on NFI Group's balance sheet by reading our health report here. TSX:NFI Discounted Cash Flow as at Aug 2024

Turning Ideas Into Actions

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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:CMG TSX:KXS and TSX:NFI.

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