With mixed inflation signals, bond markets sending different messages across regions, and cash still earning reasonable yields, investors are paying closer attention to what really drives long term equity value, reliable cash generation and what they are paying for it. The Undervalued Stocks Based On Cash Flows screener focuses on companies where discounted cash flow estimates sit above the current share price, which can appeal to investors who prioritize hard cash over headlines. In this article, three stocks from the screener are highlighted to show how this theme can fit into a disciplined, value-focused watchlist.

Broadcom (AVGO)

Overview: Broadcom is a large US technology company that supplies critical semiconductor chips and infrastructure software that help data centers, telecom networks, wireless devices, and enterprises move, store, and secure data.

Operations: Broadcom generates about US$47.8b in revenue from Semiconductor Solutions (including IP licensing) and around US$27.7b from Infrastructure Software.

Market Cap: US$1.74t

Broadcom may appeal to investors who focus on cash flow, as it combines a large semiconductor franchise with an infrastructure software portfolio that is tied to long term demand for computing power and data movement. AI is an important factor, with collaborations such as the Jalapeño inference chip for OpenAI and Broadcom’s AI XPV Platform helping to support analysts’ earnings growth forecasts and a reported Return on Equity of around 33.4%. At the same time, a high debt load and recent insider selling introduce risks, and concentration in AI spending could have both positive and negative effects. For investors weighing those trade offs, some may find the current pricing relative to at least one DCF estimate of fair value to be a key part of the overall thesis.

Broadcom’s AI engine and reported 33.4% Return on Equity raise big questions about how much of the story is already priced in, and the DCF valuation analysis for Broadcom could reveal the twist investors are missing

Space Exploration Technologies (SPCX)

Overview: Space Exploration Technologies operates Starlink, a global satellite broadband network, runs a launch business that designs, builds, and flies reusable rockets, and is expanding into AI with its Grok large language model, enterprise solutions, and supporting infrastructure.

Operations: Space Exploration Technologies generates about US$12.2b from Connectivity, US$3.8b from its Space segment, and US$3.3b from AI services.

Market Cap: US$2.02t

Space Exploration Technologies brings together three powerful engines in one stock: Starlink as a profitable core business, a growing launch operation, and a fast building AI platform that now includes major compute contracts and the planned Cursor acquisition. Revenue is reported to be expanding quickly and analysts expect earnings to grow over 60% a year and turn positive within three years, while the share price still sits below at least one DCF estimate of fair value. On the other hand, the company is currently loss making, runs with high leverage, a short cash runway, and has seen significant insider selling, all in a stock that trades on very rich multiples and can be highly volatile.

Space Exploration Technologies combines Starlink cash generation, launch scale and rapidly expanding artificial intelligence capabilities in one stock, yet the real tension between its rich multiples and future earnings sits inside the analyst forecasts for Space Exploration Technologies

Palantir Technologies (PLTR)

Overview: Palantir Technologies builds data and artificial intelligence platforms that help government agencies and commercial customers turn large, complex data sets into real time decisions, from counterterrorism and defense operations through to insurance, construction, and marketing.

Operations: Palantir generates about US$2.8b from Government customers and around US$2.5b from Commercial clients.

Market Cap: US$270.7b

Palantir Technologies operates at the intersection of high growth AI software and mission critical data infrastructure. Analyst estimates currently indicate earnings growth of around 32% a year and revenue growth of about 31% a year, supported by a Return on Equity of 26.8% and net margins of 43.7%. Recent developments include being named the cloud data layer for the US Army’s Next Generation Command and Control program and signing multi year agreements with the USDA, Google Cloud and Kirkland & Ellis, reflecting both government and enterprise demand. The stock also faces scrutiny around valuation multiples, insider selling and potential political or regulatory pushback, especially around sensitive contracts like the NHS deal. This context highlights the importance of detailed valuation work and risk assessment for investors who are building a long term, cash flow focused watchlist.

Palantir’s high margin AI engine and government contracts are getting attention, but the real story sits in how analysts see its next phase of growth playing out inside the analyst forecasts for Palantir Technologies

The three stocks highlighted here are only a small sample of this idea. The full Undervalued Stocks Based On Cash Flows screener currently flags 699 more companies with cash flow stories that could be just as compelling as those already covered in this article, all grouped inside the Undervalued Stocks Based On Cash Flows screener. Using Simply Wall St, you can analyze these companies in more detail and identify those with the specific catalysts, cash flow profiles, and valuation gaps that fit your highest conviction, value oriented approach.

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Seeking Alternatives Before the Crowd Moves?

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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.