ASX Stocks Estimated To Be Trading Below Fair Value In September 2024
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Over the last 7 days, the Australian market has remained flat, yet over the past 12 months, it has risen by 11%, with earnings forecast to grow by 12% annually. In this environment, identifying stocks that are trading below their fair value can present excellent opportunities for investors looking to capitalize on potential growth.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Mader Group (ASX:MAD) | A$5.33 | A$10.53 | 49.4% |
| Duratec (ASX:DUR) | A$1.30 | A$2.59 | 49.9% |
| Elders (ASX:ELD) | A$9.37 | A$18.11 | 48.3% |
| Hansen Technologies (ASX:HSN) | A$4.26 | A$8.22 | 48.1% |
| DroneShield (ASX:DRO) | A$1.465 | A$2.70 | 45.8% |
| VEEM (ASX:VEE) | A$1.70 | A$3.24 | 47.6% |
| Ansell (ASX:ANN) | A$30.65 | A$56.70 | 45.9% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Clover (ASX:CLV) | A$0.385 | A$0.72 | 46.6% |
| Superloop (ASX:SLC) | A$1.74 | A$3.31 | 47.5% |
Here we highlight a subset of our preferred stocks from the screener.
Domino's Pizza Enterprises
Overview: Domino's Pizza Enterprises Limited operates retail food outlets and has a market cap of approximately A$2.78 billion.
Operations: The company generates revenue of A$2.38 billion from its restaurant operations.
Estimated Discount To Fair Value: 24.2%
Domino's Pizza Enterprises appears undervalued based on cash flows, trading at A$30.58, below its estimated fair value of A$40.33. Despite high debt levels and past shareholder dilution, the company reported strong earnings growth with net income rising to A$95.96 million from A$40.57 million last year. Revenue increased slightly to A$2.38 billion, and earnings are forecasted to grow 20.5% annually over the next three years, outpacing market expectations.
DroneShield
Overview: DroneShield Limited develops, commercializes, and sells hardware and software technology for drone detection and security in Australia and the United States, with a market cap of A$1.28 billion.
Operations: Revenue Segments (in millions of A$): Aerospace & Defense: 67.52
Estimated Discount To Fair Value: 45.8%
DroneShield is trading at A$1.47, significantly below its estimated fair value of A$2.70, indicating it may be undervalued based on cash flows. Despite a net loss of A$4.8 million for the half year ended June 2024, revenue nearly doubled to A$23.99 million from the previous year. The company has completed a follow-on equity offering worth A$120 million and is forecasted to achieve significant earnings growth (45.2% annually) over the next three years, outpacing market expectations.