Global growth signals are becoming more supportive, with many regions reporting cooler inflation and steadier activity. That kind of backdrop often puts cash generation and valuation discipline back in focus for stock pickers. The Undervalued Stocks Based On Cash Flows screener targets companies where current prices sit below SWS DCF fair value estimates, yet the cash flow profile still looks promising. For investors who care about what a business produces in cash rather than headlines, this can be a useful hunting ground. This article discusses three of the stocks currently flagged by the screener.

Sterling Infrastructure (STRL)

Overview: Sterling Infrastructure is a U.S. construction and services company that prepares sites and builds critical assets for data centers, e commerce hubs, transport links and residential and commercial buildings across multiple regions. Through its E Infrastructure, Transportation and Building Solutions segments, Sterling Infrastructure supports blue chip customers across highways, airports, ports, rail, power and large scale housing.

Market Cap: US$16.6b

Sterling Infrastructure stands out in this screener because cash flow expectations are tied to a record order book and strong demand for data centric projects such as AI ready data centers and semiconductor facilities. Revenue and earnings growth have run ahead of the wider construction industry, while high return on equity and improving efficiency point to solid underlying economics rather than pure hype. At the same time, the business leans heavily on mega projects, federal and state infrastructure funding and external borrowings. These can all introduce lumpiness and funding risk if conditions change. Investors who want to see how these growth drivers and pressure points stack up against current market expectations are missing a key part of the Sterling Infrastructure story.

Sterling Infrastructure’s record order book and high return on equity suggest that the headline story might still be incomplete. To see how those strengths compare with funding and project risk, review the 4 key rewards and 2 important warning signs

Universal Music Group (ENXTAM:UMG)

Overview: Universal Music Group is a global music company that signs and develops artists and songwriters, then earns revenue by recording, licensing and distributing their work across streaming services, physical formats, films, TV, games and live events, while also selling related merchandise and managing brand rights.

Operations: Universal Music Group generates most of its revenue from Recorded Music at €9.8b, supported by Music Publishing at €2.3b and Merchandising and Other at €0.8b, partly offset by small intersegment eliminations.

Market Cap: €27.0b

Universal Music Group offers investors a mix of global scale, recurring subscription revenue and exposure to AI driven music partnerships, but it also comes with visible growing pains. The company is tying its future to paid streaming, premium tiers and new licensing formats, while also pushing for €250m in cost savings and higher ROE over the next few years. At the same time, margins have recently weakened, net income for the latest half year is much lower than last year, and the stock has fallen after subscription growth missed expectations. Heavy reliance on superstar artists, high debt and a dividend that is not well covered by earnings mean investors who only look at streaming growth headlines could miss some critical trade offs in the Universal Music Group story.

Streaming subscriptions, reliance on superstars and rising costs are all pulling Universal Music Group in different directions right now. Get the fuller picture with the 2 key rewards and 4 important warning signs (1 is major!)

Flex (FLEX)

Overview: Flex is a global manufacturing and supply chain partner that designs, builds and manages complex hardware for customers in data centers, communications, automotive, healthcare, industrial and consumer sectors, helping large brands bring products to market efficiently at scale.

Operations: Flex generates most of its revenue from Integrated Technology Solutions at US$11.6b, followed by Regulated Manufacturing Solutions at US$10.5b and Cloud and Power Infrastructure at US$7.2b, with sales spread across major manufacturing hubs including Mexico, the U.S., China and Malaysia.

Market Cap: US$43.4b

Flex is attracting attention because its Cloud and Power Infrastructure business is tightly linked to AI data center build outs, while the planned SpinCo separation and recent S&P 500 inclusion are reshaping how investors think about the stock. Recent quarters show double digit revenue growth, rising margins and higher guidance, yet the shares still trade well below the Simply Wall St DCF estimate and analyst targets that sit above the current price. That potential upside is balanced by thin margins, high debt and heavy exposure to a small group of large customers that could shift work in house. Investors who want to evaluate whether AI driven activity, the spin off and the company’s cash flow profile offset those pressures may need a deeper understanding of the Flex story.

Flex’s AI fueled infrastructure story and SpinCo plans have investors focused on the upside, while thin margins and customer concentration sit in the background. Get the full context in the analysis report for Flex

The three stocks in this article are only a sample of the opportunities. The full Undervalued Stocks Based On Cash Flows results highlight 765 more companies where cash generation and discounted pricing create equally compelling stories, all surfaced through the Undervalued Stocks Based On Cash Flows screener. Use Simply Wall St to identify and analyze the specific catalysts, cash flow trends and valuation narratives that matter to you so you can focus on the highest conviction ideas.

Take Control of Your Investment Journey

If Flex 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.

Seeking Fresh Alternatives Before They Fly

Some stocks are already building breakout momentum while others are still under the radar for now. Use these fresh lists before the edge drops away and get in early.

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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.