As the Canadian market navigates a period of anticipation following the U.S. Federal Reserve's recent symposium in Jackson Hole, investors are keenly watching for signals on future rate cuts. With markets largely holding steady amid these developments, identifying undervalued stocks becomes crucial for those looking to capitalize on potential opportunities. In this environment, a good stock is often characterized by strong fundamentals and resilience to economic shifts, making it well-positioned to offer value despite broader market uncertainties.

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.

We'll examine a selection from our screener results.

AtkinsRéalis Group

Overview: AtkinsRéalis Group (TSX:ATRL) is an integrated professional services and project management company with a market cap of CA$9.40 billion.

Operations: AtkinsRéalis generates revenue from several segments, including Capital (CA$127.40 million), Nuclear (CA$1.20 billion), LSTK Projects (CA$318.44 million), and Segment Adjustment (CA$7.46 billion).

Estimated Discount To Fair Value: 29.2%

AtkinsRéalis Group appears undervalued based on cash flows, trading at CA$53.79, which is 29.2% below its estimated fair value of CA$75.96. The company has secured significant contracts, including a mandate for Jubilant HollisterStier's Montreal facility expansion and the Surrey Langley SkyTrain project in B.C., bolstering future revenue streams. Recent earnings showed strong growth with net income rising to CA$82.19 million from CA$63.8 million year-over-year, supported by increased revenue and raised full-year guidance reflecting robust demand and backlog strength.

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

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

MDA Space

Overview: MDA Space Ltd. designs, manufactures, and services space robotics, satellite systems and components, and intelligence systems globally, with a market cap of CA$1.89 billion.

Operations: The company's revenue segments are Geointelligence, Robotics & Space Operations, and Satellite System, totaling CA$860.80 million.

Estimated Discount To Fair Value: 16.8%

MDA Space is trading at CA$15.85, 16.8% below its estimated fair value of CA$19.04, indicating it may be undervalued based on cash flows. The company reported strong Q2 sales of CA$242 million, up from CA$196 million year-over-year, and raised its full-year revenue guidance to between $1.02 billion and $1.06 billion. Additionally, MDA secured a significant $1 billion contract for the Canadarm3 program with the Canadian Space Agency, enhancing future revenue prospects.

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

• Delve into the full analysis health report here for a deeper understanding of MDA Space.

TerraVest Industries

Overview: TerraVest Industries Inc. (TSX:TVK) manufactures and sells goods and services to energy, agriculture, mining, transportation, and other markets in Canada and the United States with a market cap of CA$1.88 billion.

Operations: The company's revenue segments include Service (CA$201.78 million), Processing Equipment (CA$117.58 million), Compressed Gas Equipment (CA$243.77 million), and HVAC and Containment Equipment (CA$292.90 million).

Estimated Discount To Fair Value: 25.8%

TerraVest Industries reported strong earnings for Q3 2024, with revenue increasing to CA$238.13 million from CA$150.36 million a year ago and net income rising to CA$11.92 million from CA$7.97 million. The company is trading at approximately 25% below its estimated fair value of CA$130.72, highlighting its potential as an undervalued stock based on cash flows despite significant insider selling and high debt levels. Earnings are forecasted to grow significantly at 21% annually over the next three years, outpacing the Canadian market average of 15%.

• Insights from our recent growth report point to a promising forecast for TerraVest Industries' business outlook.

• Navigate through the intricacies of TerraVest Industries with our comprehensive financial health report here.

Next Steps

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Interested In Other Possibilities?

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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:MDA and TSX:TVK.

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