In 2025, the Canadian stock market has faced volatility and softened growth outlooks, emphasizing the importance of diversification within portfolios. Amidst this environment, identifying undervalued stocks can present opportunities for long-term investors to add quality investments at potentially attractive prices.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Click here to see the full list of 23 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Here we highlight a subset of our preferred stocks from the screener.

Aya Gold & Silver

Overview: Aya Gold & Silver Inc. is involved in the exploration, evaluation, and development of precious metals projects in Morocco and has a market capitalization of CA$1.74 billion.

Operations: The company generates revenue primarily from its production activities at the Zgounder Silver Mine in Morocco, amounting to $40.85 million.

Estimated Discount To Fair Value: 47%

Aya Gold & Silver is trading at CA$13.26, significantly below its estimated fair value of CA$25.02, suggesting potential undervaluation based on cash flows. The company reported robust silver production and an updated mineral resource estimate at its Boumadine Project in Morocco, indicating substantial resource growth. Despite recent insider selling, Aya's earnings are forecasted to grow rapidly by 94.9% annually over the next three years, outpacing both revenue and market averages in Canada.

• The analysis detailed in our Aya Gold & Silver growth report hints at robust future financial performance.
• Click here to discover the nuances of Aya Gold & Silver with our detailed financial health report.

CAE

Overview: CAE Inc., along with its subsidiaries, offers simulation training and critical operations support solutions across various regions including Canada, the United States, the United Kingdom, Europe, Asia, Oceania, Africa, and the Rest of the Americas with a market cap of CA$11.24 billion.

Operations: The company's revenue is derived from two primary segments: Civil Aviation, contributing CA$2.68 billion, and Defense and Security, accounting for CA$1.88 billion.

Estimated Discount To Fair Value: 42.1%

CAE is trading at CA$35.24, well below its estimated fair value of CA$60.88, highlighting potential undervaluation based on cash flows. The company reported significant earnings growth with net income rising to CA$168.6 million from CA$56.5 million year-over-year for Q3 2024. Despite a high debt level and slower revenue growth forecasts (6.4% annually), recent strategic partnerships and board changes could strengthen its market position in aviation training solutions in Canada and globally.

• Our expertly prepared growth report on CAE implies its future financial outlook may be stronger than recent results.
• Navigate through the intricacies of CAE with our comprehensive financial health report here.

K92 Mining

Overview: K92 Mining Inc. is involved in the exploration and development of mineral deposits in Papua New Guinea, with a market cap of CA$2.88 billion.

Operations: The company's revenue is primarily derived from the Kainantu Project, which generated $350.62 million.

Estimated Discount To Fair Value: 39.1%

K92 Mining is trading at CA$12.06, significantly below its estimated fair value of CA$19.81, suggesting potential undervaluation based on cash flows. The company reported substantial earnings growth with net income rising to US$111.22 million from US$33.16 million year-over-year for 2024, driven by record production levels that exceeded guidance. Recent executive changes may enhance exploration capabilities, although significant insider selling over the past three months warrants caution for investors considering this stock.

• Our growth report here indicates K92 Mining may be poised for an improving outlook.
• Click to explore a detailed breakdown of our findings in K92 Mining's balance sheet health report.

Seize The Opportunity

• Embark on your investment journey to our 23 Undervalued TSX Stocks Based On Cash Flows selection here.
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Searching for a Fresh Perspective?

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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.

Companies discussed in this article include TSX:AYA TSX:CAE and TSX:KNT.

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