3 UK Stocks That Could Be Trading Up To 40.7% Below Intrinsic Value Estimates

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The recent performance of the FTSE 100, influenced by weak trade data from China and falling commodity prices, has highlighted vulnerabilities in the UK market. In such a climate, identifying undervalued stocks that could be trading significantly below their intrinsic value becomes crucial for investors looking to capitalize on potential growth opportunities.

Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom

Name

Current Price

Fair Value (Est)

Discount (Est)

TBC Bank Group (LSE:TBCG)

£30.15

£57.68

47.7%

Liontrust Asset Management (LSE:LIO)

£6.51

£12.43

47.6%

Marks Electrical Group (AIM:MRK)

£0.645

£1.27

49.2%

Topps Tiles (LSE:TPT)

£0.47

£0.9

47.6%

Gaming Realms (AIM:GMR)

£0.4005

£0.76

47.3%

C&C Group (LSE:CCR)

£1.562

£2.99

47.8%

AstraZeneca (LSE:AZN)

£130.76

£248.13

47.3%

Mercia Asset Management (AIM:MERC)

£0.35

£0.67

47.9%

Franchise Brands (AIM:FRAN)

£1.82

£3.60

49.5%

Forterra (LSE:FORT)

£1.786

£3.50

49%

Click here to see the full list of 61 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

Let's explore several standout options from the results in the screener.

Smith & Nephew

Overview: Smith & Nephew plc, with a market cap of £10.21 billion, develops, manufactures, markets, and sells medical devices and services in the United Kingdom and internationally.

Operations: Smith & Nephew generates revenue from three primary segments: Orthopaedics ($2.26 billion), Sports Medicine & ENT ($1.77 billion), and Advanced Wound Management (AWM) ($1.61 billion).

Estimated Discount To Fair Value: 32.8%

Smith & Nephew is trading at £11.71, significantly below its estimated fair value of £17.41, indicating it may be undervalued based on cash flows. Despite a high level of debt and a dividend yield of 2.42% not well-covered by earnings or free cash flows, the company's earnings are forecast to grow 22.68% annually, outpacing the UK market's growth rate. Recent strategic partnerships and product clearances further bolster its potential for future revenue enhancement.

LSE:SN. Discounted Cash Flow as at Aug 2024
LSE:SN. Discounted Cash Flow as at Aug 2024

Supermarket Income REIT

Overview: Supermarket Income REIT plc (LSE: SUPR) is a real estate investment trust focused on investing in grocery properties that are integral to the UK's food supply chain, with a market cap of approximately £947.14 million.

Operations: Supermarket Income REIT's revenue primarily comes from its real estate investment segment, generating £106.29 million.