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The United Kingdom's stock market has recently faced challenges, with the FTSE 100 index experiencing declines due to weak trade data from China and falling commodity prices affecting major companies. In such a fluctuating environment, identifying stocks that might be trading below their estimated intrinsic values can offer potential opportunities for investors seeking to navigate these uncertain conditions.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Begbies Traynor Group (AIM:BEG) | £0.92 | £1.70 | 45.9% |
| Coats Group (LSE:COA) | £0.913 | £1.65 | 44.7% |
| Hercules Site Services (AIM:HERC) | £0.495 | £0.93 | 46.8% |
| Brickability Group (AIM:BRCK) | £0.556 | £1.10 | 49.6% |
| On the Beach Group (LSE:OTB) | £2.52 | £4.95 | 49.1% |
| Gaming Realms (AIM:GMR) | £0.37 | £0.72 | 48.5% |
| GlobalData (AIM:DATA) | £1.82 | £3.55 | 48.8% |
| Victrex (LSE:VCT) | £9.93 | £19.55 | 49.2% |
| Duke Capital (AIM:DUKE) | £0.291 | £0.57 | 48.6% |
| Deliveroo (LSE:ROO) | £1.356 | £2.60 | 47.9% |
Here's a peek at a few of the choices from the screener.
GlobalData
Overview: GlobalData Plc, along with its subsidiaries, offers business information through proprietary data, analytics, and insights across Europe, North America, and the Asia Pacific regions with a market cap of £1.43 billion.
Operations: The company's revenue is primarily derived from its Data, Analytics, and Insights segment, which generated £276.80 million.
Estimated Discount To Fair Value: 48.8%
GlobalData is trading at £1.82, significantly below its estimated fair value of £3.55, indicating it may be undervalued based on cash flows. The company forecasts revenue growth of 11.7% annually, outpacing the UK market's 3.6%, with earnings expected to grow significantly at 25.8%. Despite a dividend yield of 2.58% not being well-covered by earnings, analysts anticipate a stock price increase of nearly 46%. Recent guidance suggests steady revenue growth for the fiscal year 2024.
Legal & General Group
Overview: Legal & General Group Plc offers a range of insurance products and services across the UK, the US, and internationally, with a market cap of £13.81 billion.
Operations: The company's revenue segments include Insurance (£3.20 billion) and Retail Retirement (£1.55 billion).
Estimated Discount To Fair Value: 23.2%
Legal & General Group is trading at £2.36, over 20% below its estimated fair value of £3.07, highlighting potential undervaluation based on cash flows. Despite expected revenue decline of 0.6% annually over three years, earnings are forecast to grow significantly at 25.2%, outpacing the UK market's growth rate of 14.9%. However, a dividend yield of 8.75% is not well covered by earnings, and debt coverage by operating cash flow remains a concern amidst recent board changes for strategic growth focus.