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The ASX200 recently broke its winning streak, closing slightly down by 0.04% at 8,024 points, with sectors showing mixed performance; Telecommunication and Health Care rose while Utilities and Energy fell. In such a fluctuating market environment, identifying undervalued stocks becomes crucial for investors looking to capitalize on potential discounts of up to 45.4%.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Click here to see the full list of 49 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Let's take a closer look at a couple of our picks from the screened companies.

Codan

Overview: Codan Limited develops technology solutions for various sectors including United Nations organizations, security and military groups, government departments, individuals, and small-scale miners, with a market cap of A$2.70 billion.

Operations: Codan's revenue segments include Communications at A$326.91 million and Metal Detection at A$219.85 million.

Estimated Discount To Fair Value: 16.3%

Codan Limited is trading at A$14.87, below its estimated fair value of A$17.78, suggesting it may be undervalued based on cash flows. The company reported strong earnings growth for the year ended June 30, 2024, with net income rising to A$81.39 million from A$67.7 million a year ago and sales increasing to A$550.46 million from A$456.5 million. Revenue and earnings are forecasted to grow faster than the Australian market averages at 9% and 16.8% per year respectively, indicating robust future performance potential.

• Upon reviewing our latest growth report, Codan's projected financial performance appears quite optimistic.

• Take a closer look at Codan's balance sheet health here in our report.

IPH

Overview: IPH Limited, with a market cap of A$1.72 billion, provides intellectual property services and products through its subsidiaries.

Operations: The company's revenue segments include Intellectual Property Services in Asia (A$121.50 million), Canada (A$196.10 million), and Australia & New Zealand (A$295.10 million).

Estimated Discount To Fair Value: 45.4%

IPH Limited is trading at A$6.48, significantly below its estimated fair value of A$11.88, indicating it may be undervalued based on cash flows. Earnings are forecast to grow 17.7% annually, outpacing the Australian market's 13.6%. Recent earnings showed sales of A$605.6 million and net income of A$60.8 million for FY2024, down from last year despite higher revenue. However, shareholders faced dilution due to recent equity offerings totaling approximately A$125 million in August 2024.

• According our earnings growth report, there's an indication that IPH might be ready to expand.

• Delve into the full analysis health report here for a deeper understanding of IPH.

Lovisa Holdings

Overview: Lovisa Holdings Limited operates in the retail sale of fashion jewelry and accessories, with a market cap of A$4.11 billion.

Operations: The company's revenue primarily comes from the retail sale of fashion jewelry and accessories, amounting to A$654 million.

Estimated Discount To Fair Value: 34.4%

Lovisa Holdings (A$37.48) is trading 34.4% below its estimated fair value of A$57.1, suggesting it is undervalued based on cash flows. Revenue and earnings are forecast to grow at 13.4% and 17.3% per year, respectively, outpacing the Australian market averages of 5.3% and 13.6%. Additionally, Lovisa's Return on Equity is projected to be very high at 99.6% in three years, reinforcing its strong financial position despite recent slower revenue growth compared to significant benchmarks.

• Insights from our recent growth report point to a promising forecast for Lovisa Holdings' business outlook.

• Unlock comprehensive insights into our analysis of Lovisa Holdings stock in this financial health report.

Summing It All Up

• Click through to start exploring the rest of the 46 Undervalued ASX Stocks Based On Cash Flows now.

• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.

• Join a community of smart investors by using Simply Wall St. It's free and delivers expert-level analysis on worldwide markets.

Ready For A Different Approach?

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

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• 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 ASX:CDA ASX:IPH and ASX:LOV.

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