Discover 3 TSX Stocks Estimated To Be Trading Below Fair Value

The Canadian market experienced significant volatility in August, with stocks ultimately recovering from a near 5% pullback, buoyed by an expanding economy and positive earnings growth. As tech heavyweights face lofty expectations and potential deceleration, investors are increasingly turning their attention to undervalued stocks that could benefit from the broadening earnings growth and supportive economic conditions.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name	Current Price	Fair Value (Est)	Discount (Est)
goeasy (TSX:GSY)	CA$182.01	CA$359.84	49.4%
Computer Modelling Group (TSX:CMG)	CA$12.00	CA$22.26	46.1%
Alvopetro Energy (TSXV:ALV)	CA$5.04	CA$9.07	44.5%
Calian Group (TSX:CGY)	CA$44.10	CA$72.67	39.3%
Africa Oil (TSX:AOI)	CA$1.90	CA$3.71	48.7%
Kinaxis (TSX:KXS)	CA$145.80	CA$280.50	48%
Viemed Healthcare (TSX:VMD)	CA$10.45	CA$20.08	48%
Currency Exchange International (TSX:CXI)	CA$24.57	CA$39.19	37.3%
NanoXplore (TSX:GRA)	CA$2.16	CA$4.21	48.7%
Opsens (TSX:OPS)	CA$2.90	CA$4.64	37.5%

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

Let's explore several standout options from the results in the screener.

Calian Group (TSX:CGY)

Overview: Calian Group Ltd. offers business services and solutions both in Canada and internationally, with a market cap of CA$525.51 million.

Operations: The company's revenue segments are ITCS (CA$215.64 million), Health (CA$211.36 million), Learning (CA$106.89 million), and Advanced Technologies (CA$207.51 million).

Estimated Discount To Fair Value: 39.3%

Calian Group (CA$44.1) appears undervalued, trading 39.3% below its estimated fair value of CA$72.67 based on discounted cash flow analysis. Despite a dip in net income to CA$1.3 million for Q3 2024 from CA$4.67 million a year ago, revenue grew to CA$185 million from CA$166.55 million year-over-year. The company has announced a share repurchase program and expects significant earnings growth of 35.81% annually, outpacing the Canadian market's forecasted growth rate of 15.2%.

• Our earnings growth report unveils the potential for significant increases in Calian Group's future results.
• Navigate through the intricacies of Calian Group with our comprehensive financial health report here.

Lithium Royalty (TSX:LIRC)

Overview: Lithium Royalty Corp. is a lithium-focused royalty company operating in Australia, Canada, South America, and the United States with a market cap of CA$338.89 million.

Operations: The company's revenue segment primarily consists of $6.16 million from the acquisition and management of royalty rights and working interests.

Estimated Discount To Fair Value: 31.9%

Lithium Royalty Corp. (CA$6.1) trades 31.9% below its estimated fair value of CA$8.96, indicating significant undervaluation based on discounted cash flow analysis. The company reported a net income of US$0.266 million for Q2 2024, reversing a loss from the previous year, and earnings are expected to grow at 110.7% annually with profitability anticipated within three years. Additionally, LIRC has initiated a share repurchase program to buy back up to 5% of its shares by July 2025.

• In light of our recent growth report, it seems possible that Lithium Royalty's financial performance will exceed current levels.
• Get an in-depth perspective on Lithium Royalty's balance sheet by reading our health report here.

VersaBank (TSX:VBNK)

Overview: VersaBank offers a range of banking products and services in Canada and the United States, with a market cap of CA$468.40 million.

Operations: VersaBank generates revenue through its diverse banking products and services across Canada and the United States.

Estimated Discount To Fair Value: 14.1%

VersaBank (CA$17.37) trades 14.1% below its estimated fair value of CA$20.22, indicating it is undervalued based on cash flows. The bank's earnings are forecast to grow significantly at 29% annually, outpacing the Canadian market average of 15.2%. Recent Q3 results showed stable net interest income but a slight dip in net income compared to last year, with nine-month figures reflecting solid growth in both metrics and earnings per share from continuing operations reaching CA$1.29 from CA$1.10 a year ago.

• The growth report we've compiled suggests that VersaBank's future prospects could be on the up.
• Click here and access our complete balance sheet health report to understand the dynamics of VersaBank.

Taking Advantage

• Embark on your investment journey to our 30 Undervalued TSX Stocks Based On Cash Flows selection here.
• Hold shares in these firms? Setup your portfolio in Simply Wall St to seamlessly track your investments and receive personalized updates on your portfolio's performance.
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Interested In Other Possibilities?

• 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.

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