Global markets are wrestling with mixed signals on inflation, interest rates and growth, which keeps plenty of noise in headline indices. Cash flows often tell a clearer story. The Undervalued Stocks Based On Cash Flows screener focuses on companies where SWS DCF valuation suggests the market price sits below the estimated fair value, even though the underlying cash generation looks promising. That can appeal if you care more about what a business earns in cash than short term sentiment. This article highlights three of the best looking stocks from that screener that may merit a spot on your watchlist.

DLocal (DLO)

Overview: DLocal is a Uruguay based payments company that helps global merchants accept and send money across emerging markets, offering pay in and pay out solutions across cards, bank transfers, cash and other local methods. Its platform is used by companies in sectors such as e commerce, streaming, travel, ride hailing, financial services and gaming to handle complex cross border payment flows.

Operations: DLocal generates its US$1.21b in revenue almost entirely from payment processing services across its global network.

Market Cap: US$4.49b

DLocal stands out if you care about cash generation and efficiency. The business has a capital light model, high returns on equity, and a focus on payment flows in 40+ emerging markets where local expertise can be hard to replicate. Earnings growth has been strong, revenue is forecast to grow at around 20% per year, and the company is profitable with reported high quality earnings, even as margins have compressed. At the same time, the stock carries risks around regulation, customer concentration and a higher risk funding structure, and the board has seen rapid turnover. The tension between its growth profile, DCF implied undervaluation and these risks is what many investors are still working through today.

DLocal's cash rich model and DCF implied discount suggest that the market may not fully be pricing its 40+ country footprint yet. See how the DCF valuation analysis for DLocal connects that growth story with the key risk twist investors often overlook.

Flex (FLEX)

Overview: Flex is a global manufacturing and supply chain company that designs, builds, and manages technology hardware for data centers, communications, consumer products, autos, healthcare, industrial uses, and power systems across the Americas, Asia, and Europe.

Operations: Flex generates most of its revenue from Integrated Technology Solutions at about US$11.6b, followed by Regulated Manufacturing Solutions at about US$10.5b and Cloud and Power Infrastructure at about US$7.2b.

Market Cap: US$43.39b

Flex catches attention because it sits at the heart of rising demand for AI and data center hardware, with its Cloud and Power Infrastructure segment tied closely to high power, liquid cooled systems that many large customers now rely on. At the same time, the stock appears inexpensive relative to estimated future cash flows. Analysts currently expect strong revenue and earnings growth and see scope for higher returns on equity in the coming years. The planned spin off of the cloud and power business in 2027, along with major AI hardware contracts, could reshape the mix of growth and margins. The flip side is thin margins, high debt, and heavy reliance on a small group of clients, which makes execution and capital allocation especially important to watch.

Flex sits at the intersection of rising AI hardware demand, thin margins and a seemingly low valuation. See how the 4 key rewards and 3 important warning signs explains what could amplify the upside or quietly cap it

Boeing (BA)

Overview: Boeing is a global aerospace company that builds and supports commercial jetliners, military aircraft, satellites, missile defense systems and space flight platforms, while also providing ongoing services such as maintenance, training and parts to airlines and governments worldwide.

Operations: Boeing generates most of its revenue from Commercial Airplanes at about US$43.4b, followed by Defense, Space & Security at about US$29.4b and Global Services at about US$21.3b.

Market Cap: US$184.54b

Boeing offers a mix of appeal and caution that many investors look for in a cash flow focused stock. The company has a record backlog reportedly above US$500b and fresh FAA approvals for key 737 MAX variants. Together these factors support expectations for stronger revenue, free cash flow and high forecast returns on equity over the next few years. At the same time, the balance sheet carries heavy debt, commercial airplanes are still working through loss making programs and recent results were helped by large one off gains. If you think the combination of backlog, new orders and services growth can outweigh those risks, Boeing is a stock that may warrant closer attention within an undervalued cash flow screen.

Boeing’s huge backlog and fresh FAA approvals could be masking a very different risk reward profile than the headline story suggests. Read the 3 key rewards and 2 important warning signs (1 is major!) and see what might flip the script next.

The three stocks here are only a starting point, since the full Undervalued Stocks Based On Cash Flows screener has identified 145 more companies with cash flow stories that could be just as compelling as these highlights from the Undervalued Stocks Based On Cash Flows screener. Use Simply Wall St to identify and analyze the specific catalysts and narratives that matter most to you, and focus on the highest conviction opportunities for your watchlist.

Take Control of Your Investment Journey

If DLocal or any of these companies have caught your attention, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value and track any new developments as they happen. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Curious To Explore High Conviction Alternatives

Fresh stock ideas can start moving before they hit the headlines. Use these hand picked screeners while the signals still matter and the entry window is open.

• Spot steady compounders with strong balance sheets before they gain wider attention by reviewing the curated list of solid balance sheet and fundamentals (46 results).
• Review structural trends in AI infrastructure by scanning the carefully filtered 55 AI infrastructure stocks that focuses on companies involved in data centers and compute capacity.
• Identify resilient cash generators with a focus on capital protection by reviewing the hand selected 82 resilient stocks with low risk scores.

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.