3 UK Stocks Estimated To Be Trading Below Intrinsic Value
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The United Kingdom market has recently faced challenges, with the FTSE 100 index closing lower amid weak trade data from China and a sluggish global economic recovery. Despite these headwinds, investors can still find opportunities in stocks that are estimated to be trading below their intrinsic value. Identifying such undervalued stocks requires careful analysis of their fundamentals, especially in uncertain market conditions like those we are currently experiencing.
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% |
| Gaming Realms (AIM:GMR) | ￡0.4005 | ￡0.76 | 47.3% |
| Liontrust Asset Management (LSE:LIO) | ￡6.51 | ￡12.24 | 46.8% |
| Topps Tiles (LSE:TPT) | ￡0.47 | ￡0.9 | 47.6% |
| Marks Electrical Group (AIM:MRK) | ￡0.645 | ￡1.27 | 49.2% |
| C&C Group (LSE:CCR) | ￡1.562 | ￡2.99 | 47.7% |
| AstraZeneca (LSE:AZN) | ￡130.76 | ￡248.35 | 47.3% |
| Mercia Asset Management (AIM:MERC) | ￡0.35 | ￡0.67 | 48.1% |
| Franchise Brands (AIM:FRAN) | ￡1.82 | ￡3.60 | 49.5% |
| Forterra (LSE:FORT) | ￡1.786 | ￡3.50 | 49% |
Below we spotlight a couple of our favorites from our exclusive screener.
Forterra
Overview: Forterra plc manufactures and sells building products in the United Kingdom, with a market cap of ￡369.52 million.
Operations: Forterra's revenue segments include Bespoke Products generating ￡67.70 million and Bricks and Blocks contributing ￡261.10 million.
Estimated Discount To Fair Value: 49%
Forterra (￡1.79) is trading significantly below its estimated fair value of ￡3.5, indicating it may be undervalued based on cash flows. Despite forecasted annual earnings growth of 42.7%, profit margins have declined from 8.9% to 2.5%. Revenue growth is expected to be slower at 8% per year compared to the UK market's 3.7%. Recent financials show a drop in sales and net income for H1 2024, with dividends also reduced from last year’s interim payout.
Hays
Overview: Hays plc provides recruitment services across Australia, New Zealand, Germany, the United Kingdom, Ireland, and internationally with a market cap of ￡1.51 billion.
Operations: The company's revenue primarily comes from Qualified, Professional, and Skilled Recruitment services, amounting to ￡6.95 billion.
Estimated Discount To Fair Value: 18.3%
Hays (￡0.95) is trading below its estimated fair value of ￡1.17, suggesting it may be undervalued based on cash flows. Despite a forecasted annual earnings growth of 63.29%, recent financials show a decline in sales to ￡6.95 billion and a net loss of ￡4.9 million for the year ended June 30, 2024, compared to net income last year. The dividend yield is currently not well covered by earnings, indicating potential sustainability issues.