Cooling US producer price inflation has taken some pressure off interest rate expectations, which puts the spotlight back on what investors are actually paying for future cash flows. When the cost of money steadies, mispriced cash generative businesses can attract renewed attention. This article walks through three stocks from the Undervalued Stocks Based On Cash Flows screener that currently screen as undervalued on SWS DCF and may merit a closer look.
The three stocks highlighted below are just a sample from this idea, and the full screen surfaced 22 more companies with similarly compelling cash flow stories that are not covered here. To identify and analyze those additional opportunities in detail, head straight to the Undervalued Stocks Based On Cash Flows screener.
Kraken Robotics (TSXV:PNG)
Kraken Robotics is a marine technology company that supplies sonar and optical sensors, subsea batteries and underwater robotic systems mainly to defense and offshore energy customers worldwide. It generated about CA$66 million from Products and CA$41 million from Services, so most revenue currently comes from selling hardware like Synthetic Aperture Sonar, KATFISH towed systems and SeaPower batteries rather than survey work. The company now sits in mid cap territory with a market value of roughly CA$1.95b.
Kraken Robotics sits at the intersection of growing unmanned defense and offshore energy activity, with new orders of about CA$35 million in July adding to a year to date product order book of roughly CA$327 million and guidance for substantially higher 2026 revenue after the Covelya acquisition. Analysts expect strong revenue and earnings expansion and see upside to the current share price, while the Simply Wall St model also flags the stock as trading below estimated cash flow value. The catch is that Kraken is still loss making, carries higher risk funding, has seen meaningful insider selling and has a rich P/S compared with peers, so investors need to weigh rapid growth expectations against integration, execution and balance sheet risks that are not yet fully reflected in past results.
Kraken Robotics has an order book building fast, while losses, insider selling and a richer P/S quietly shape the risk profile. See how the 2 key rewards and 1 important warning sign might change your view on what really drives this story next.
Build your own cash flow and contracts shortlist
Kraken Robotics and the other two stocks in this list all surfaced from a single Simply Wall St screener, which shows what is possible when you start filtering for cash flows, balance sheets and risk. Use our customisable Screener to set your own rules, or jump straight into any of our curated Investing Ideas for ready made starting points.
Pan American Silver (TSX:PAAS)
Pan American Silver is a large precious metals producer with silver and gold mines across the Americas, backed by a portfolio that also includes zinc, lead and copper. Revenue is broadly spread across several key operations, with Brazil’s Jacobina mine contributing about US$762 million, Chile’s El Peñon about US$693 million, Peru’s Shahuindo about US$515 million and Argentina’s Cerro Moro about US$552 million, alongside meaningful contributions from Timmins in Canada and La Colorada in Mexico. The company now sits firmly in large cap territory with a market value of roughly CA$27.5b.
Pan American Silver has caught investor attention because strong recent earnings growth, high quality margins and Q2 2026 cash generation sit alongside a stock that still screens as undervalued on cash flows. Integration of low cost assets like Juanicipio and ongoing work at Jacobina and La Colorada Skarn could reshape the cost base and future free cash flow. In addition, a rising dividend and sizeable liquidity support ongoing capital returns. Set against that are real risks around project execution, technical challenges at several gold mines and a balance sheet that leans on external borrowing. This means the current valuation gap only looks attractive if you are comfortable with how those operational and funding risks are managed from here.
Pan American Silver’s cash rich operations and asset mix could be masking where the real upside and risk now sit. For a more complete view, see the full picture in the 4 key rewards and 1 important warning sign
Celestica (TSX:CLS)
Celestica is a Toronto based supply chain and electronics manufacturing company that designs, builds and services hardware platforms for original equipment makers and cloud providers, including hyperscalers and AI infrastructure customers. It generates about US$3.3b from Advanced Technology Solutions and roughly US$12.3b from Connectivity & Cloud Solutions, so most revenue currently comes from cloud and communications focused work. The company now has a market value of about CA$55.7b.
Investors watching the AI build out should have Celestica on their radar. Surging demand for networking and rack scale AI platforms from hyperscalers, a raised 2026 revenue outlook and partnerships with groups like AMD and OpenAI have pushed earnings growth far ahead of the broader Canadian market, while returns on equity sit around 45%. At the same time, revenue is heavily concentrated in a handful of large customers and the company is leaning on external borrowing and fresh equity issuance to fund capacity. This could pressure margins if AI capex or new product ramps slow. The key question is whether the current cash flow potential and growth in higher margin services outweigh that concentration and funding risk from here.
Celestica’s accelerating role in AI hardware and services has many investors focused on the headline story, yet the real twist may sit in how future expectations are lining up against reality in the analyst forecasts for Celestica
Seeking Fresh Alternatives Before Momentum Flies
Breakout ideas rarely stay under the radar for long. Fresh stock lists can move quickly once momentum is caught. Check these while it still matters and get in early.
- Hunt for under the radar growth stories with resilient balance sheets using the curated 9 high quality undiscovered gems before the crowd starts chasing them.
- Ride potential income momentum by scanning the hand picked 4 dividend fortresses that aim to keep yields flying while prices have not yet fully caught up.
- Capture early moves in the energy transition by reviewing the focused 91 nuclear energy infrastructure stocks while these infrastructure plays are still dropping in under most investors’ screens.
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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