As the Canadian market navigates a period of relative stability, with the TSX only 4% off its record high thanks to strong performance in the materials sector, investors are keenly observing developments that could influence future growth. In this environment, identifying undervalued stocks becomes crucial as they offer potential opportunities for gains when markets eventually move beyond their current rangebound state.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name Current Price Fair Value (Est) Discount (Est) Propel Holdings (TSX:PRL) CA$26.71 CA$45.44 41.2% K92 Mining (TSX:KNT) CA$12.71 CA$24.81 48.8% Savaria (TSX:SIS) CA$17.06 CA$30.94 44.9% Computer Modelling Group (TSX:CMG) CA$7.99 CA$10.88 26.6% Docebo (TSX:DCBO) CA$44.18 CA$78.38 43.6% illumin Holdings (TSX:ILLM) CA$1.90 CA$3.65 47.9% Lithium Royalty (TSX:LIRC) CA$5.13 CA$9.06 43.4% AtkinsRéalis Group (TSX:ATRL) CA$66.85 CA$112.59 40.6% Teck Resources (TSX:TECK.B) CA$49.36 CA$83.34 40.8% CAE (TSX:CAE) CA$33.85 CA$64.69 47.7%

Click here to see the full list of 17 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

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

AtkinsRéalis Group

Overview: AtkinsRéalis Group Inc. offers professional services, project management, and capital investment services across the United Kingdom, Canada, the United States, Saudi Arabia, and other international markets with a market cap of CA$11.69 billion.

Operations: The company's revenue segments include Engineering Services - UKI (CA$2.48 billion), Engineering Services - USLA (CA$1.71 billion), Engineering Services - AMEA (CA$1.32 billion), Engineering Services - Canada (CA$1.46 billion), Nuclear (CA$1.49 billion), Linxon (CA$835.68 million), Capital (CA$126.06 million), and LSTK Projects (CA$249.37 million).

Estimated Discount To Fair Value: 40.6%

AtkinsRéalis Group is trading significantly below its estimated fair value, presenting a potential opportunity for investors focused on cash flow valuation. Despite a modest revenue growth forecast of 6.6% annually, the company's earnings are expected to grow significantly at 22% per year, outpacing the Canadian market. Recent strategic projects in Hong Kong and Puerto Rico could enhance cash flows further, although return on equity is projected to remain low at 12.1%.

Our expertly prepared growth report on AtkinsRéalis Group implies its future financial outlook may be stronger than recent results. Get an in-depth perspective on AtkinsRéalis Group's balance sheet by reading our health report here.TSX:ATRL Discounted Cash Flow as at Apr 2025

CAE

Overview: CAE Inc. is a company that offers simulation training and critical operations support solutions globally, with a market cap of CA$10.83 billion.

Story Continues

Operations: The company's revenue is derived from two main segments: Civil Aviation, which accounts for CA$2.68 billion, and Defense and Security, contributing CA$1.88 billion.

Estimated Discount To Fair Value: 47.7%

CAE is trading well below its estimated fair value of CA$64.69, suggesting it could be undervalued based on cash flows. The company has secured significant contracts, including a long-term agreement with General Atomics and a strategic partnership for Canada's Future Fighter Lead-in Training program. Despite high debt levels, CAE's earnings are forecast to grow significantly at 81.57% annually, surpassing the Canadian market growth rate and potentially enhancing future cash flows.

The growth report we've compiled suggests that CAE's future prospects could be on the up. Delve into the full analysis health report here for a deeper understanding of CAE.TSX:CAE Discounted Cash Flow as at Apr 2025

Savaria

Overview: Savaria Corporation offers accessibility solutions for the elderly and physically challenged across Canada, the United States, Europe, and internationally with a market cap of CA$1.22 billion.

Operations: The company's revenue is primarily derived from two segments: Patient Care, which contributes CA$193.88 million, and Accessibility (including Adapted Vehicles), which accounts for CA$673.88 million.

Estimated Discount To Fair Value: 44.9%

Savaria is trading at a significant discount, 44.9% below its estimated fair value of CA$30.94, highlighting potential undervaluation based on cash flows. The company reported sales of CA$867.76 million for 2024 and net income growth to CA$48.51 million, reflecting robust financial health despite large one-off items impacting results. Analysts forecast annual earnings growth of 22.4%, outpacing the Canadian market, with revenue expected to rise by 5-8% in fiscal 2025 driven by strategic initiatives.

Insights from our recent growth report point to a promising forecast for Savaria's business outlook. Navigate through the intricacies of Savaria with our comprehensive financial health report here.TSX:SIS Discounted Cash Flow as at Apr 2025

Taking Advantage

Embark on your investment journey to our 17 Undervalued TSX Stocks Based On Cash Flows selection 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. Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.

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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:ATRL TSX:CAE and TSX:SIS.

This article was originally published by Simply Wall St.

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