3 TSX Stocks Believed To Be Trading Below Estimated Fair Value
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The Canadian market has shown positive momentum, with a 1.0% increase over the last week and a robust 22% rise over the past year, while earnings are anticipated to grow by 15% annually in the coming years. In this context, identifying stocks that are trading below their estimated fair value can present opportunities for investors seeking to capitalize on potential growth within an improving market environment.
Top 10 Undervalued Stocks Based On Cash Flows In Canada
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| goeasy (TSX:GSY) | CA$184.81 | CA$360.65 | 48.8% |
| Computer Modelling Group (TSX:CMG) | CA$11.89 | CA$21.91 | 45.7% |
| Kinaxis (TSX:KXS) | CA$158.96 | CA$283.67 | 44% |
| Endeavour Mining (TSX:EDV) | CA$31.22 | CA$55.74 | 44% |
| Viemed Healthcare (TSX:VMD) | CA$10.45 | CA$20.08 | 48% |
| Bragg Gaming Group (TSX:BRAG) | CA$6.77 | CA$10.56 | 35.9% |
| Blackline Safety (TSX:BLN) | CA$6.12 | CA$11.00 | 44.4% |
| Lithium Royalty (TSX:LIRC) | CA$6.03 | CA$8.92 | 32.4% |
| Boyd Group Services (TSX:BYD) | CA$212.00 | CA$342.92 | 38.2% |
| Opsens (TSX:OPS) | CA$2.90 | CA$4.64 | 37.5% |
Here's a peek at a few of the choices from the screener.
Constellation Software
Overview: Constellation Software Inc. acquires, builds, and manages vertical market software businesses across Canada, the United States, Europe, and internationally with a market cap of CA$92.57 billion.
Operations: The company's revenue primarily comes from its Software & Programming segment, which generated $9.27 billion.
Estimated Discount To Fair Value: 22%
Constellation Software is trading at CA$4,340, significantly below its estimated fair value of CA$5,565.89, indicating potential undervaluation based on cash flows. Despite high debt levels and recent insider selling, the company reported strong earnings growth with net income rising to US$177 million in Q2 2024 from US$103 million a year ago. Earnings are projected to grow substantially faster than the Canadian market over the next three years.
GFL Environmental
Overview: GFL Environmental Inc. provides non-hazardous solid waste management and environmental services across Canada and the United States, with a market cap of CA$22.03 billion.
Operations: The company generates revenue from its segments, including CA$4.79 billion from Solid Waste in the USA, CA$2.16 billion from Solid Waste in Canada, and CA$1.67 billion from Environmental Services.