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As the Canadian economy navigates a period of rising inflation and anticipated interest rate cuts by the Bank of Canada, investors are keeping a close eye on potential opportunities within the market. In this environment, identifying undervalued stocks can be particularly appealing, as these equities may offer substantial upside potential when market conditions stabilize.
Top 10 Undervalued Stocks Based On Cash Flows In Canada
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Savaria (TSX:SIS) | CA$17.05 | CA$30.34 | 43.8% |
| Docebo (TSX:DCBO) | CA$44.64 | CA$84.75 | 47.3% |
| K92 Mining (TSX:KNT) | CA$12.06 | CA$19.76 | 39% |
| Thunderbird Entertainment Group (TSXV:TBRD) | CA$1.67 | CA$3.25 | 48.7% |
| Lithium Royalty (TSX:LIRC) | CA$4.89 | CA$9.15 | 46.6% |
| Groupe Dynamite (TSX:GRGD) | CA$14.75 | CA$27.24 | 45.8% |
| Tourmaline Oil (TSX:TOU) | CA$68.70 | CA$136.58 | 49.7% |
| Kits Eyecare (TSX:KITS) | CA$12.35 | CA$24.49 | 49.6% |
| Aya Gold & Silver (TSX:AYA) | CA$12.91 | CA$24.91 | 48.2% |
| CAE (TSX:CAE) | CA$36.48 | CA$60.63 | 39.8% |
Underneath we present a selection of stocks filtered out by our screen.
Groupe Dynamite
Overview: Groupe Dynamite Inc. operates fashion retail stores in North America and has a market cap of CA$1.46 billion.
Operations: The company's revenue from apparel amounts to CA$927.05 million.
Estimated Discount To Fair Value: 45.8%
Groupe Dynamite is trading at CA$14.75, significantly below its estimated fair value of CA$27.24, indicating it may be undervalued based on cash flows. Despite a high level of debt, the company's earnings are forecast to grow at 16.6% annually, outpacing the Canadian market's average growth rate. Analysts agree on a potential stock price increase of 76.6%, supported by past earnings growth of 66.5% and strong future revenue projections.
Kits Eyecare
Overview: Kits Eyecare Ltd. operates a digital eyecare platform in the United States and Canada, with a market cap of CA$374.19 million.
Operations: The company generates revenue of CA$159.34 million from the sale of eyewear products across its digital platform in the United States and Canada.
Estimated Discount To Fair Value: 49.6%
Kits Eyecare, trading at CA$12.35, is valued significantly below its estimated fair value of CA$24.49. The company's earnings are expected to grow substantially at 49.5% per year, outpacing the Canadian market's average growth rate. Recent innovations include launching integrated vision care insurance support in the U.S., enhancing customer experience and potentially driving future revenue growth, which is projected to increase by 17.6% annually, faster than the broader Canadian market.