Cash Flow Stocks To Watch As Higher Bond Yields Pressure Valuations

Rising sovereign bond yields in major economies are lifting discount rates and putting pressure on many stock valuations. That can push even healthy cash generators below their estimated fair value, creating an entry point for patient investors who care about what a business earns rather than short term swings. This article highlights three stocks from the Undervalued Stocks Based On Cash Flows screener that stand out today.

The three stocks covered below are just a sample, and the full screen surfaced 27 more companies with equally compelling cash flow stories that are not discussed in this article. To identify and analyze those opportunities in detail, head straight to the Undervalued Stocks Based On Cash Flows screener.

Kraken Robotics (TSXV:PNG)

Overview: Kraken Robotics is a marine technology company that supplies sonar and optical sensors, SeaPower deep sea batteries and underwater robotic systems that help military and commercial customers map the seafloor, inspect subsea assets and support unmanned underwater vehicles. Its gear underpins missions such as mine countermeasures, offshore energy surveys and environmental monitoring in Canada and across Asia Pacific, North America and EMEA.

Operations: Kraken Robotics generates about CA$66 million from Products and CA$41 million from Services, with Asia Pacific, North America and EMEA all contributing to its roughly CA$108 million of revenue.

Market Cap: CA$1.9 billion

Investors watching underwater defense and offshore energy should pay attention to Kraken Robotics. The company sits at the crossroads of rising demand for unmanned underwater vehicles, higher subsea survey workloads and a growing installed base of SeaPower batteries, supported by recent acquisitions such as 3D at Depth and Covelya Group that broaden its sonar, LiDAR and navigation offering. Analysts expect strong revenue and earnings growth, yet Kraken is still loss making and carries higher risk funding with significant debt taken on for Covelya. Add in recent insider selling and you have a stock where rapid growth expectations and elevated financial risk are pulling in opposite directions. This is why careful investors are taking a closer look at the current cash flow based valuation.

Kraken Robotics sits at the intersection of underwater defense demand, subsea surveys and SeaPower batteries, yet its loss making profile and acquisition debt leave questions. See how the 2 key rewards and 1 important warning sign might reframe that trade off.

Build your own underwater tech shortlist

Kraken Robotics and the two other stocks in this article all came from a single screener, and you can run the same kind of search in your own way. Use our flexible Screener to mix filters like valuation, cash flows, balance sheet strength and risks so they fit your style, or jump straight into our ready made Investing Ideas for curated starting points.

Stantec (TSX:STN)

Overview: Stantec is a global engineering and design consultancy that helps governments and private clients plan, design and manage critical infrastructure, from water and environmental projects to transportation, buildings and energy systems across North America and international markets.

Operations: Stantec generates about CA$3.6b of revenue from the United States, CA$1.6b from Canada and CA$1.7b from its Global segment.

Market Cap: CA$11.5b

Stantec catches investor attention because it blends a large and growing infrastructure and water project backlog of CA$9.2b with improving profitability, reflected in an 18.7% adjusted EBITDA margin in Q2 2026 and net profit margins that management aims to lift further through higher margin consulting work and digital tools like AI and global delivery centers. At the same time, the stock carries questions around integration of recent acquisitions, relatively high debt funding and reliance on government infrastructure budgets, all of which can affect how consistently that backlog converts into cash. With analysts highlighting potential upside and recent contract wins such as major US Army Corps of Engineers coastal resilience projects, the full story on Stantec’s cash flow profile is worth a closer look.

Stantec’s growing CA$9.2b backlog and its focus on higher margin consulting are drawing attention, but the real story lies in how that work converts into cash. Use the 5 key rewards and 1 important warning sign to see what might be hiding in plain sight.

Celestica (TSX:CLS)

Overview: Celestica provides electronics manufacturing and end to end supply chain solutions for large customers, from design and engineering through to assembly, testing, logistics and after market services, serving original equipment makers, cloud providers, hyperscalers and companies across aerospace, defense, industrial, HealthTech and communications markets.

Operations: Celestica generates about US$3.3 billion of revenue from its Advanced Technology Solutions segment and about US$12.3 billion from Connectivity & Cloud Solutions.

Market Cap: CA$53.5 billion

Celestica sits in the middle of the AI and cloud hardware build out, supplying hyperscalers with advanced networking and rack scale platforms while also supporting higher margin industrial and aerospace customers. Revenue and earnings growth have been strong, return on equity is high, and recent guidance has been raised as AI infrastructure demand feeds into record revenue and wider margins. At the same time, heavy reliance on a few large hyperscaler customers, high non cash earnings and fresh equity issuance to fund AI capacity mean execution and funding risks are present. For investors who want exposure to AI hardware and prefer to weigh cash flows against these trade offs, Celestica may warrant closer consideration.

AI hardware momentum at Celestica is powerful, yet investor focus on headline earnings may miss what the cash generation profile really signals about sustainability. Explore the full analysis report for Celestica for a detailed walkthrough.

Curious About Alternative Stock Paths?

Fresh ideas can move fast. Some stocks are building quiet momentum while attention is elsewhere and pricing can change before the crowd notices. Scan these screens now to explore potential opportunities before they become widely followed.

• Spot companies building quiet strength before they gain wider attention by scanning a curated 9 high quality undiscovered gems that are still under most investors' radar, while it matters.
• Focus on resilient businesses that hold up when sentiment drops by reviewing a focused 8 resilient stocks with low risk scores and see which stocks keep their footing when others stumble.
• Explore companies supplying the backbone of next generation chips and data centers by running the curated 55 AI infrastructure stocks and review the enablers of AI infrastructure.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com