Over the last 7 days, the Canadian market has dropped 2.3%, driven by losses of 4.8% and 6.4%. However, in the past year, the market is up 12% with earnings forecasted to grow by 15% annually. In this fluctuating environment, identifying undervalued stocks can offer significant opportunities for investors looking to capitalize on potential growth at a discount.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Click here to see the full list of 30 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Underneath we present a selection of stocks filtered out by our screen.

Endeavour Mining

Overview: Endeavour Mining plc, with a market cap of CA$6.74 billion, operates as a gold mining company in West Africa through its subsidiaries.

Operations: Endeavour Mining's revenue segments include $612.70 million from Houndé Mine, $509.60 million from Sabodala Massawa Mine, $308.40 million from Mana Mine Burkina Faso, and $708.10 million from Ity Mine C?te D’Ivoire.

Estimated Discount To Fair Value: 48%

Endeavour Mining is trading at CA$27.57, significantly below its estimated fair value of CA$53.03, reflecting a strong undervaluation based on discounted cash flows. Despite recent legal settlements and share buybacks totaling $20 million, the company faces challenges with a net loss of $65.8 million in Q2 2024 and a dividend not well covered by earnings or free cash flow. However, Endeavour's revenue growth forecast of 11.5% annually outpaces the Canadian market average of 6.7%.

• Our comprehensive growth report raises the possibility that Endeavour Mining is poised for substantial financial growth.

• Unlock comprehensive insights into our analysis of Endeavour Mining stock in this financial health report.

Paramount Resources

Overview: Paramount Resources Ltd. explores for and develops conventional and unconventional petroleum and natural gas reserves in Canada, with a market cap of CA$3.83 billion.

Operations: The company generates revenue from its operations in the exploration and development of both conventional and unconventional petroleum and natural gas reserves in Canada.

Estimated Discount To Fair Value: 10.1%

Paramount Resources (CA$26.1) trades below its estimated fair value of CA$29.03, presenting a potential undervaluation based on cash flows. Earnings are forecast to grow 27.48% annually, outpacing the Canadian market's 15.3%. However, shareholder dilution occurred over the past year and profit margins have declined from 35.2% to 19.7%. Recent insider selling and dividends not well covered by free cash flows are concerns despite strong revenue growth in recent quarters and ongoing share buybacks.

• According our earnings growth report, there's an indication that Paramount Resources might be ready to expand.

• Click to explore a detailed breakdown of our findings in Paramount Resources' balance sheet health report.

5N Plus

Overview: 5N Plus Inc. produces and sells specialty metals and chemicals across North America, Europe, and Asia, with a market cap of CA$607.31 million.

Operations: Revenue segments for 5N Plus Inc. include Performance Materials at $82.69 million and Specialty Semiconductors at $184.92 million.

Estimated Discount To Fair Value: 15.4%

5N Plus (CA$6.83) trades below its estimated fair value of CA$8.08, indicating potential undervaluation based on cash flows. Earnings are forecast to grow 36.4% annually, significantly outpacing the Canadian market's 15.3%. However, recent financial results show a decline in net income from US$10.14 million to US$4.79 million year-over-year for Q2 2024, and interest payments are not well covered by earnings despite becoming profitable this year and revenue growth forecasts of 9.8% annually exceeding the market average of 6.7%.

• The analysis detailed in our 5N Plus growth report hints at robust future financial performance.

• Click here to discover the nuances of 5N Plus with our detailed financial health report.

Where To Now?

• Take a closer look at our Undervalued TSX Stocks Based On Cash Flows list of 30 companies by clicking here.

• Are you invested in these stocks already? Keep abreast of every twist and turn by setting up a portfolio with Simply Wall St, where we make it simple for investors like you to stay informed and proactive.

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Want To Explore Some Alternatives?

• 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:EDV TSX:POU and TSX:VNP.

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