As U.S. stock markets kicked off September with significant declines, led by a sharp drop in tech and semiconductor stocks, investors are increasingly cautious about the economic outlook and potential Federal Reserve rate cuts. Despite these challenges, opportunities may exist for discerning investors to identify undervalued stocks that could be trading below their fair value. In this environment, a good stock is often characterized by strong fundamentals such as solid earnings growth, manageable debt levels, and competitive positioning within its industry. Here are three U.S. stocks that might be trading below their fair value based on these criteria.

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

Click here to see the full list of 193 stocks from our Undervalued US Stocks Based On Cash Flows screener.

Here we highlight a subset of our preferred stocks from the screener.

Atour Lifestyle Holdings

Overview: Atour Lifestyle Holdings Limited, with a market cap of $2.62 billion, develops lifestyle brands centered around hotel offerings in the People’s Republic of China through its subsidiaries.

Operations: Revenue Segments (in millions of CN￥): Atour Group: 6064.66

Estimated Discount To Fair Value: 30.5%

Atour Lifestyle Holdings is trading at US$18.95, significantly below its estimated fair value of US$27.28. The company’s earnings and revenue are forecast to grow at 23.24% and 20.5% per year, respectively, outpacing the broader U.S. market growth rates of 15% and 8.7%. Recently, Atour announced a three-year annual dividend policy distributing no less than 50% of net income annually, enhancing shareholder value despite a previously unstable dividend track record.

• The growth report we've compiled suggests that Atour Lifestyle Holdings' future prospects could be on the up.

• Delve into the full analysis health report here for a deeper understanding of Atour Lifestyle Holdings.

Grab Holdings

Overview: Grab Holdings Limited operates as a superapp provider in Southeast Asia, offering services across transportation, food delivery, and digital payments with a market cap of approximately $12.75 billion.

Operations: The company's revenue segments include Mobility ($959 million), Deliveries ($1.29 billion), and Financial Services ($224 million).

Estimated Discount To Fair Value: 12.8%

Grab Holdings is trading at US$3.32, approximately 12.8% below its estimated fair value of US$3.81, with earnings forecast to grow 59.83% annually and expected profitability within three years. Recent Q2 results showed a significant reduction in net loss from US$135 million to US$53 million year-over-year, alongside a revenue increase to US$664 million from US$567 million. The company also completed a substantial share buyback program worth $131.2 million, enhancing shareholder value.

• Our growth report here indicates Grab Holdings may be poised for an improving outlook.

• Take a closer look at Grab Holdings' balance sheet health here in our report.

Truist Financial

Overview: Truist Financial Corporation, a financial services company with a market cap of $59.54 billion, provides banking and trust services in the Southeastern and Mid-Atlantic United States.

Operations: Truist Financial's revenue segments include $24.12 billion from Segment Adjustment and -$9.88 billion from Treasury & Corporate (Ot&C).

Estimated Discount To Fair Value: 41%

Truist Financial is trading at US$44.22, significantly below its estimated fair value of US$74.90, suggesting it may be undervalued based on cash flows. Despite a recent decline in net income to US$903 million for Q2 2024 from US$1.31 billion a year ago, the company's earnings are forecast to grow by 60.54% annually and become profitable within three years. Recent fixed-income offerings totaling $1 billion further bolster its financial position amidst executive changes and strategic technology investments.

• Our earnings growth report unveils the potential for significant increases in Truist Financial's future results.

• Get an in-depth perspective on Truist Financial's balance sheet by reading our health report here.

Summing It All Up

• Reveal the 193 hidden gems among our Undervalued US Stocks Based On Cash Flows screener with a single click here.

• Already own these companies? Link your portfolio to Simply Wall St and get alerts on any new warning signs to your stocks.

• Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent.

Interested In Other Possibilities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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.

Companies discussed in this article include NasdaqGS:ATAT NasdaqGS:GRAB and NYSE:TFC.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]