Sasha Jovanovic
5 min read
When inflation data keeps surprising to the upside and interest rates look set to stay higher for longer, cash really starts to matter. Strong cash generation can give Canadian companies more room to handle rising funding costs and tougher economic conditions. That is why stocks where the current price sits below a conservative cash flow valuation can appeal right now. This article highlights three such opportunities.
The three examples in this piece are just a sample, and the same cash flow lens used here surfaced 6 more companies with similarly strong stories that are not covered below. If you want to go straight to the source and identify, compare, and analyze value ideas on your own terms, head into the Undervalued Stocks Based On Cash Flows screener.
Stantec (TSX:STN)
Stantec is a global design and consulting group that helps public and private clients plan, engineer, and manage infrastructure, with its water and municipal projects creating repeatable fee income that aligns closely with the screener’s focus on cash flow led value. The business has a market value of about CA$11.8b.
The analyst consensus Narrative on Simply Wall St frames Stantec as a business where resilient consulting work in water, infrastructure, and related programs underpins the cash flow story that matters for this screen. The quote below captures how that demand is feeding into the pipeline.
“Demand for infrastructure upgrades, water and wastewater treatment, energy transition and climate adaptation projects remains very strong globally. This is reflected in double digit organic growth in Water across multiple regions and a record contract backlog of about $9.2b, which points to an extended runway for net revenue and earnings growth as multi year projects are executed.”
What matters next is how one less visible pressure on Stantec’s profitability shapes the cash conversion behind that growing backlog.
That pressure on cash conversion is exactly where the full narrative for Stantec connects the backlog story to valuation, highlighting where profitability could be quietly accelerating or at risk.
Barrick Mining (TSX:ABX)
Barrick Mining runs a large portfolio of gold and copper operations that generate the long lived cash flows this screener is built around, with major revenue coming from Carlin at about US$5.3b, Pueblo Viejo at roughly US$2.9b, Turquoise Ridge at US$2.7b and a market value near CA$88.9b.
The analyst consensus Narrative on Simply Wall St frames Barrick Mining as a business where operational tuning in Nevada could meaningfully reshape how those cash flows show up in earnings. It highlights one key agreement that aims to tighten up costs and throughput rather than just add more ounces.
