Examining Three TSX Stocks Estimated To Be Undervalued In July 2024

As the U.S. grapples with significant economic topics such as government debt and trade policies during the presidential campaign, these discussions could influence market sentiments and economic conditions in neighboring Canada, impacting investment strategies. In this context, identifying stocks that appear undervalued becomes crucial, considering how broader economic factors may affect their intrinsic value and future performance in the TSX.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name	Current Price	Fair Value (Est)	Discount (Est)
goeasy (TSX:GSY)	CA$183.05	CA$313.41	41.6%
Trisura Group (TSX:TSU)	CA$41.56	CA$80.18	48.2%
Decisive Dividend (TSXV:DE)	CA$7.03	CA$11.76	40.2%
Kinaxis (TSX:KXS)	CA$158.54	CA$262.47	39.6%
Kraken Robotics (TSXV:PNG)	CA$1.16	CA$2.24	48.1%
Endeavour Mining (TSX:EDV)	CA$32.19	CA$48.65	33.8%
Viemed Healthcare (TSX:VMD)	CA$10.45	CA$20.08	48%
Green Thumb Industries (CNSX:GTII)	CA$15.81	CA$28.22	44%
Opsens (TSX:OPS)	CA$2.90	CA$4.64	37.5%
Capstone Copper (TSX:CS)	CA$10.46	CA$18.88	44.6%

Click here to see the full list of 19 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Green Thumb Industries (CNSX:GTII)

Overview: Green Thumb Industries Inc., operating in the United States, focuses on the manufacturing, distribution, marketing, and sale of cannabis products for both medical and adult use, with a market capitalization of CA$3.73 billion.

Operations: The company generates revenue primarily through two segments: Retail, which brought in $806.38 million, and Consumer Packaged Goods, contributing $583.78 million.

Estimated Discount To Fair Value: 44%

Green Thumb Industries, trading at CA$15.81, significantly under its fair value of CA$28.22, appears undervalued based on discounted cash flows. With earnings forecasted to grow by 27.26% annually, surpassing the Canadian market's growth, and recent expansions enhancing its retail footprint in Florida to 96 locations nationwide, the company is poised for substantial growth despite a forecasted low return on equity of 10.2% in three years. These factors suggest a potential for increased profitability tied closely to strategic expansions and market penetration efforts.

• Our earnings growth report unveils the potential for significant increases in Green Thumb Industries' future results.
• Get an in-depth perspective on Green Thumb Industries' balance sheet by reading our health report here.

Brookfield Asset Management (TSX:BAM)

Overview: Brookfield Asset Management Ltd. is a Canadian real estate investment firm specializing in alternative asset management services, with a market capitalization of approximately CA$23.31 billion.

Operations: The firm operates primarily in the alternative asset management sector, focusing on real estate investments.

Estimated Discount To Fair Value: 17.4%

Brookfield Asset Management, trading at CA$55.54, is positioned below its estimated fair value of CA$67.23, indicating potential undervaluation based on discounted cash flows. Despite recent merger and acquisition activities, including a possible offer for Tritax EuroBox and selling parts of its Indian renewable portfolio, BAM's revenue growth is expected to outpace the Canadian market significantly. However, its dividend coverage by earnings and free cash flow remains weak, suggesting challenges in sustainable payouts amidst aggressive expansion strategies.

• Upon reviewing our latest growth report, Brookfield Asset Management's projected financial performance appears quite optimistic.
• Navigate through the intricacies of Brookfield Asset Management with our comprehensive financial health report here.

Constellation Software (TSX:CSU)

Overview: Constellation Software Inc. operates globally, focusing on acquiring, building, and managing vertical market software businesses primarily in Canada, the United States, and Europe, with a market capitalization of approximately CA$87.88 billion.

Operations: The company generates CA$8.84 billion in revenue from its software and programming segment.

Estimated Discount To Fair Value: 25.6%

Constellation Software, priced at CA$4147.15, appears undervalued by over 20% against its fair value of CA$5570.71, based on discounted cash flow analysis. Recent executive changes and the launch of Omegro highlight strategic expansions, possibly enhancing capital deployment efficiency. Despite a high level of debt and significant insider selling in the past three months, CSU's earnings are expected to grow by 24.43% annually, outpacing the Canadian market forecast of 15.2%. Revenue growth projections also exceed market averages.

• Our expertly prepared growth report on Constellation Software implies its future financial outlook may be stronger than recent results.
• Delve into the full analysis health report here for a deeper understanding of Constellation Software.

Summing It All Up

• Dive into all 19 of the Undervalued TSX Stocks Based On Cash Flows we have identified here.
• Are any of these part of your asset mix? Tap into the analytical power of Simply Wall St's portfolio to get a 360-degree view on how they're shaping up.
• Simply Wall St is your key to unlocking global market trends, a free user-friendly app for forward-thinking investors.

Contemplating Other Strategies?

• 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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