Eurozone manufacturing is now at its strongest point in four years, even as many investors still watch headlines about growth with caution. That gap between improving real world activity and hesitant sentiment can leave solid cash generators trading below fair value. This article looks at our Undervalued Stocks Based On Cash Flows screener and highlights three stocks that combine discounted prices with promising cash flow profiles.

The three stocks covered below are just a sample, and the full screen surfaced 141 more companies with cash flow stories that are not covered here but may be just as compelling for value driven investors. To go straight to the full list and focus on your own criteria, analyze the Undervalued Stocks Based On Cash Flows screener.

Jabil (JBL)

Jabil is a global manufacturing and engineering partner that designs and builds hardware, embedded electronics and supply chain solutions for sectors ranging from healthcare and automotive to connected devices. Its strongest link to the undervalued cash flow theme comes from Intelligent Infrastructure, where long term contracts to produce cloud data center servers and networking or storage hardware support recurring, scalable cash generation. Jabil generated about US$12.4b from Regulated Industries, US$15.8b from Intelligent Infrastructure and US$5.4b from Connected Living and Digital Commerce, and the company is valued at roughly US$33.8b.

Jabil provides exposure to the build out of AI and cloud data centers, where those long duration OEM manufacturing agreements can translate into substantial and relatively predictable cash flows, and the stock still screens as undervalued on a DCF basis. Recent guidance upgrades, strong return on equity and a planned US$1.5b buyback all indicate a management team that appears confident in the cash generation story. In addition, expansion in India and pharma introduces extra growth angles. The flip side is meaningful debt, tariff uncertainty and pressure in areas such as EVs and renewable energy, which could test margins and cash flows if conditions stay soft. For investors focused on cash flow backed value, this mix of strengths and tension may make Jabil worth a closer look.

Jabil’s cash rich AI and cloud exposure could be hiding more value in its long term contracts than the market is pricing in right now. Yet the real twist may sit in the DCF valuation analysis for Jabil

Build your own cash flow shortlist around Jabil

Jabil and the two other stocks in this article all came from a single screener, but the real opportunity is in setting filters that fit your own process. Use our flexible Screener to blend valuation, cash flow and quality checks, or tap into any of our curated Investing Ideas for ready made starting points.

MercadoLibre (MELI)

MercadoLibre runs the leading online commerce and fintech ecosystem across Brazil, Mexico, Argentina and other Latin American markets, matching shoppers and merchants on its marketplace while Mercado Pago handles payments, wallet balances, credit and financial services that generate recurring cash flows closely linked to this screener’s cash flow focus. The company reports about US$35.2b of revenue from Internet Software & Services, reflecting the combined weight of commerce, payments, credit and logistics. MercadoLibre is a large cap stock with a market value of roughly US$97.5b.

Investors drawn to cash flow focused value should pay attention to how MercadoLibre turns Mercado Pago’s payments, wallet balances and fast growing credit book into long lived cash flows while the stock trades at a large discount to Simply Wall St’s DCF estimate. The trade off is clear: high growth in net revenue, total payment volume and credit, plus strong board independence, comes with high leverage, thinner margins and external funding that can make those cash flows less predictable. The key question is whether recent Q2 results, with revenue above US$10b and asset quality still solid, show a temporary squeeze on cash rather than a structural problem investors will wish they had spotted earlier.

MercadoLibre’s accelerating ecosystem of commerce, payments and credit could mean the current valuation gap is masking something investors have not fully priced in yet. Get the full picture in the DCF valuation analysis for MercadoLibre

Merck (MRK)

Merck is a global healthcare company best known for human pharmaceuticals such as Keytruda cancer therapy and Gardasil HPV vaccine, which are central to the recurring cash flows that link it to this undervalued cash flow screener. Human pharmaceuticals generated about US$59.6b of revenue, while Animal Health contributed roughly US$6.7b and other revenues about US$320 million, so the company is not solely reliant on its flagship drugs even though they drive much of the cash flow story. Merck’s market value is about US$375.5b.

Investors looking at Merck today are seeing a company where powerful oncology and vaccine cash flows, anchored by Keytruda and Gardasil, sit alongside a much larger late stage pipeline and fresh mRNA cancer vaccine data with Moderna that has caught the market’s attention this week. Forecast earnings growth near 32% a year and a share price that screens well below Simply Wall St’s DCF estimate point to a potential mismatch between current valuation and future cash generation, although recent one off losses, thinner 4.8% profit margins and a sizeable debt load show that the path will not be perfectly smooth. The real question is whether Merck’s expanding oncology and vaccine portfolio can offset the future Keytruda patent cliff and turn today’s cash flow doubts into tomorrow’s opportunity.

Merck’s surging oncology and vaccine cash flows could be masking a much bigger story around future earnings and valuation. Get the forward view in the analyst forecasts for Merck

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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.