3 TSX Stocks Estimated To Be Trading Below Fair Value By Up To 31.7%

Over the last 7 days, the Canadian market has risen 1.1%, and over the past 12 months, it is up by 15%, with earnings expected to grow by 16% per annum over the next few years. In this favorable environment, identifying undervalued stocks can offer substantial opportunities for investors looking to capitalize on potential gains.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name	Current Price	Fair Value (Est)	Discount (Est)
goeasy (TSX:GSY)	CA$191.15	CA$357.94	46.6%
Alvopetro Energy (TSXV:ALV)	CA$5.11	CA$8.99	43.1%
Computer Modelling Group (TSX:CMG)	CA$12.41	CA$22.24	44.2%
Kinaxis (TSX:KXS)	CA$154.20	CA$279.54	44.8%
Obsidian Energy (TSX:OBE)	CA$9.68	CA$18.11	46.5%
Africa Oil (TSX:AOI)	CA$2.09	CA$3.66	42.9%
Calibre Mining (TSX:CXB)	CA$2.33	CA$4.53	48.6%
Viemed Healthcare (TSX:VMD)	CA$10.45	CA$20.08	48%
NFI Group (TSX:NFI)	CA$19.07	CA$37.27	48.8%
NanoXplore (TSX:GRA)	CA$2.23	CA$4.18	46.7%

Click here to see the full list of 28 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Here's a peek at a few of the choices from the screener.

Constellation Software (TSX:CSU)

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$91.28 billion.

Operations: The company's revenue from Software & Programming amounts to $9.27 billion.

Estimated Discount To Fair Value: 31.7%

Constellation Software's recent earnings report highlights substantial revenue growth, with Q2 2024 revenue at US$2.47 billion, up from US$2.04 billion a year ago. Net income also surged to US$177 million from US$103 million. Despite significant insider selling recently, the stock trades at CA$4321.53, well below its estimated fair value of CA$6329.35 based on discounted cash flows (DCF). This undervaluation is bolstered by strong profit growth forecasts and a high return on equity projection of 26.1%.

• Insights from our recent growth report point to a promising forecast for Constellation Software's business outlook.
• Unlock comprehensive insights into our analysis of Constellation Software stock in this financial health report.

Ivanhoe Mines (TSX:IVN)

Overview: Ivanhoe Mines Ltd. is involved in the mining, development, and exploration of minerals and precious metals primarily in Africa, with a market cap of CA$25.17 billion.

Operations: Ivanhoe Mines Ltd. generates revenue through its mining, development, and exploration activities focused on minerals and precious metals in Africa.

Estimated Discount To Fair Value: 16.7%

Ivanhoe Mines' recent earnings report shows a decline in net income to US$76.4 million for Q2 2024 from US$92.04 million a year ago, but the company's Phase 3 concentrator at Kamoa-Kakula is set to significantly boost production capacity and cash flows. Despite substantial insider selling, the stock trades at CA$18.98, below its fair value estimate of CA$22.8 based on discounted cash flows, indicating potential undervaluation amidst strong future revenue growth forecasts.

• The growth report we've compiled suggests that Ivanhoe Mines' future prospects could be on the up.
• Take a closer look at Ivanhoe Mines' balance sheet health here in our report.

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$351.11 million.

Operations: The company generates $6.16 million from the acquisition and management of royalty rights and working interests.

Estimated Discount To Fair Value: 28.5%

Lithium Royalty Corp. is trading at CA$6.32, 28.5% below its estimated fair value of CA$8.84, suggesting it may be undervalued based on discounted cash flows. The company reported a net income of US$0.266 million for Q2 2024, a significant improvement from the previous year's net loss of US$0.887 million. Additionally, Lithium Royalty has initiated a share repurchase program to buy back up to 1,250,291 shares by July 2025, potentially enhancing shareholder value further.

• Our growth report here indicates Lithium Royalty may be poised for an improving outlook.
• Get an in-depth perspective on Lithium Royalty's balance sheet by reading our health report here.

Key Takeaways

• Take a closer look at our Undervalued TSX Stocks Based On Cash Flows list of 28 companies by clicking here.
• Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.
• Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.

Curious About Other Options?

• 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com