With inflation and interest rate expectations moving differently across major economies, many investors are looking for opportunities where prices do not fully reflect underlying cash generation. The Undervalued Stocks Based On Cash Flows screener focuses on companies that SWS DCF analysis identifies as trading below their estimated fair value, based on cash flow potential rather than short term headlines. For investors who care about what businesses earn and retain over time, this approach can be a useful starting point. In this article, you will see three of the leading stocks highlighted by this screener and how they fit into today’s macro backdrop.

Dycom Industries (DY)

Overview: Dycom Industries provides engineering, construction, and maintenance services that build and maintain the fiber, wireless, and utility networks that carry data, power, and communications across the United States.

Operations: Dycom generates about US$5.8b in revenue from Communications services, with total reported revenue of roughly US$6.3b, all from the United States.

Market Cap: US$12.3b

Investors looking at Dycom Industries are really looking at a cash flow story tied to the long buildout of fiber and data center connectivity for AI and broadband. The company has a large and growing backlog, solid earnings momentum, and improving profit margins. That opportunity sits alongside real concentration and funding risks, including reliance on a few big telecom customers and a high level of debt funded entirely by external borrowing. Recent earnings beats, raised guidance and index additions all point to a business with growing scale and visibility. The stock still screens as undervalued on cash flows, leaving a gap between what the business is generating and what the market is currently pricing in.

Dycom Industries’ cash backed story around fiber, AI connectivity, and a large backlog looks powerful, but the real tension is how that lines up with debt, customer concentration, and contract risk in the 4 key rewards and 1 important warning sign

On Holding (ONON)

Overview: On Holding is a Swiss sportswear company that designs and sells premium athletic footwear, apparel, and accessories under the On brand, targeting runners and everyday athletes across performance, outdoor, lifestyle, and training categories through both wholesale partners and its own stores and online platforms worldwide.

Operations: On Holding generates about CHF3.1b in revenue primarily from Athletic Footwear, with CHF564.5m reported from the Asia-Pacific region.

Market Cap: US$12.6b

On Holding offers investors a combination of brand strength and exposure to the athletic and lifestyle footwear market, supported by a growing direct-to-consumer and e-commerce business, an expanding international footprint, and a portfolio of product franchises that each contribute meaningfully to sales. The stock currently trades below one set of cash flow based fair value estimates, while some analysts see further potential upside. However, its elevated P/E ratio and reliance on premium pricing mean that earnings expectations are an important consideration for investors assessing whether that valuation gap may narrow. In addition, significant investment in marketing and newer categories such as football highlights both the company’s ambitions and the execution and margin risks that careful investors may want to evaluate.

On Holding’s premium pricing and high P/E are only half the story. The real question is how the growth profile stacks up against those expectations in the analyst forecasts for On Holding

Cellebrite DI (CLBT)

Overview: Cellebrite DI provides digital forensics and investigation software that helps law enforcement agencies, government bodies, and corporations legally access, analyze, and manage data from devices and cloud services in complex cases ranging from child exploitation and human trafficking to financial crime and cyber threats.

Operations: Cellebrite DI generates about US$496.4m in revenue from Internet Software & Services.

Market Cap: US$4.0b

Cellebrite DI sits at the intersection of rising digital crime and growing demand for compliant, AI-assisted investigation tools, with subscription based Internet Software & Services now driving most of its roughly US$496m in revenue and helping support recurring cash flows. Its premium P/E multiple reflects interest in areas like the FedRAMP approved government cloud and AI products such as Genesis, which are already in use across hundreds of agencies. Analysts currently model both revenue and earnings growth above broader market expectations. At the same time, heavy dependence on US federal contracts, insider selling and relatively new management create concentration and execution risks, leaving investors to weigh a mission critical platform with a premium valuation and a funding structure that relies entirely on external borrowings.

Cellebrite DI’s AI tools and government cloud contracts point to a story that feels like it is still unfolding, but the real twist sits in the analyst forecasts for Cellebrite DI that could reset how investors see its risk reward profile.

The three stocks in this article are just a starting point, and the full Undervalued Stocks Based On Cash Flows screener has surfaced 136 more companies where cash flow potential and current pricing create similarly compelling setups in the Undervalued Stocks Based On Cash Flows screener. Identify and analyze the specific catalysts, cash flow trends, and valuation gaps that matter to you inside Simply Wall St so you can focus on the highest conviction opportunities.

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If On Holding 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.

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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.