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Over the last 7 days, the Australian market has remained flat, yet it has risen 15% in the past 12 months with earnings expected to grow by 12% per annum over the next few years. In this context, identifying undervalued stocks can be a strategic move for investors looking to capitalize on potential growth opportunities.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Ingenia Communities Group (ASX:INA) | A$5.21 | A$9.40 | 44.6% |
| Medibank Private (ASX:MPL) | A$3.66 | A$6.48 | 43.5% |
| MLG Oz (ASX:MLG) | A$0.63 | A$1.16 | 45.7% |
| Ansell (ASX:ANN) | A$31.69 | A$56.23 | 43.6% |
| Megaport (ASX:MP1) | A$7.31 | A$13.50 | 45.8% |
| Genesis Minerals (ASX:GMD) | A$2.15 | A$3.96 | 45.7% |
| Charter Hall Group (ASX:CHC) | A$16.25 | A$29.26 | 44.5% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Little Green Pharma (ASX:LGP) | A$0.09 | A$0.17 | 46.8% |
| Superloop (ASX:SLC) | A$1.665 | A$3.31 | 49.7% |
Let's take a closer look at a couple of our picks from the screened companies.
Charter Hall Group
Overview: Charter Hall Group (ASX:CHC) is a leading Australian fully integrated property investment and funds management company with a market cap of A$7.69 billion.
Operations: Charter Hall's revenue segments include Funds Management (A$448.60 million), Property Investments (A$322.80 million), and Development Investments (A$73.30 million).
Estimated Discount To Fair Value: 44.5%
Charter Hall Group appears undervalued, trading at A$16.25, significantly below its estimated fair value of A$29.26. Despite a recent net loss of A$222.1 million for FY24, the company forecasts post-tax operating earnings growth of 4% and distribution growth of 6% for FY25. Analysts expect annual revenue growth of 8.3% and a return to profitability within three years, suggesting potential upside based on cash flow analysis.
Duratec
Overview: Duratec Limited (ASX:DUR) provides assessment, protection, remediation, and refurbishment services for steel and concrete infrastructure in Australia with a market cap of A$365.11 million.
Operations: Duratec's revenue segments include Energy (A$46.64 million), Defence (A$220.16 million), Buildings & Facades (A$111.33 million), and Mining & Industrial (A$155.64 million).
Estimated Discount To Fair Value: 43.5%
Duratec Limited, recently added to the S&P Global BMI Index, appears undervalued with a current trading price of A$1.47 against an estimated fair value of A$2.60. The company reported FY24 sales of A$555.79 million and net income of A$21.43 million, with earnings per share increasing from the previous year. Despite a dividend decrease, Duratec's revenue is forecast to grow at 7.3% annually, outpacing the broader Australian market's growth rate and supporting its undervaluation based on cash flow analysis.