In This Article:
Over the last 7 days, the Australian market has risen 2.2%, and in the past year, it has climbed 6.6%, with earnings expected to grow by 13% per annum over the next few years. In this environment, identifying stocks that are trading below their fair value can offer significant opportunities for investors seeking to capitalize on potential market gains.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| LaserBond (ASX:LBL) | A$0.71 | A$1.37 | 48.3% |
| Elders (ASX:ELD) | A$9.08 | A$18.11 | 49.9% |
| Telix Pharmaceuticals (ASX:TLX) | A$17.96 | A$33.23 | 45.9% |
| Regal Partners (ASX:RPL) | A$3.30 | A$6.40 | 48.4% |
| Domino's Pizza Enterprises (ASX:DMP) | A$32.21 | A$63.68 | 49.4% |
| Infomedia (ASX:IFM) | A$1.655 | A$3.06 | 45.9% |
| HMC Capital (ASX:HMC) | A$7.80 | A$13.79 | 43.4% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Little Green Pharma (ASX:LGP) | A$0.094 | A$0.17 | 44.5% |
| Airtasker (ASX:ART) | A$0.29 | A$0.52 | 44.7% |
Here's a peek at a few of the choices from the screener.
HMC Capital
Overview: HMC Capital Limited, with a market cap of A$2.94 billion, owns and manages real estate-focused funds in Australia through its subsidiaries.
Operations: HMC Capital generates revenue primarily from its real estate-focused funds in Australia, with a segment adjustment of A$80.29 million.
Estimated Discount To Fair Value: 43.4%
HMC Capital is trading at A$7.8, significantly below its estimated fair value of A$13.79, indicating it may be undervalued based on cash flows. Despite recent shareholder dilution from equity offerings totaling over A$188 million, HMC's revenue is forecast to grow 20.1% annually, outpacing the Australian market's 5.1%. Earnings are projected to grow 16.7% per year, faster than the market average of 12.8%, although return on equity remains low at a forecasted 10.6%.
Regal Partners
Overview: Regal Partners Limited, with a market cap of A$1.05 billion, is a privately owned hedge fund sponsor.
Operations: Regal Partners Limited generates its revenue primarily through the provision of investment management services, amounting to A$105.28 million.
Estimated Discount To Fair Value: 48.4%
Regal Partners is trading at A$3.3, well below its estimated fair value of A$6.4, suggesting it is undervalued based on cash flows. Earnings are forecast to grow 40.7% annually, significantly outpacing the Australian market's 12.8%. However, profit margins have declined from 14.1% to 1.5%, and there has been significant insider selling recently. Additionally, the dividend yield of 3.03% is not well covered by earnings or free cash flows.