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The United Kingdom's stock market has recently experienced a downturn, with the FTSE 100 and FTSE 250 indices closing lower amid concerns over weak trade data from China, which is impacting companies heavily tied to its economic performance. In such challenging conditions, identifying undervalued stocks can offer potential opportunities for investors seeking to capitalize on discrepancies between a company's intrinsic value and its current market price.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
Name | Current Price | Fair Value (Est) | Discount (Est) |
AstraZeneca (LSE:AZN) | £118.28 | £221.25 | 46.5% |
On the Beach Group (LSE:OTB) | £1.544 | £3.06 | 49.5% |
Watches of Switzerland Group (LSE:WOSG) | £4.334 | £8.46 | 48.8% |
S&U (LSE:SUS) | £19.00 | £36.53 | 48% |
Gulf Keystone Petroleum (LSE:GKP) | £1.289 | £2.47 | 47.8% |
Foxtons Group (LSE:FOXT) | £0.596 | £1.19 | 49.9% |
BATM Advanced Communications (LSE:BVC) | £0.18725 | £0.37 | 49.7% |
Auction Technology Group (LSE:ATG) | £4.405 | £8.41 | 47.6% |
St. James's Place (LSE:STJ) | £8.625 | £16.46 | 47.6% |
Genel Energy (LSE:GENL) | £0.762 | £1.51 | 49.7% |
Let's take a closer look at a couple of our picks from the screened companies.
Keywords Studios
Overview: Keywords Studios plc offers creative and technical services to the global video game industry, with a market cap of £1.97 billion.
Operations: The company's revenue segments consist of €365.56 million from Create, €180.43 million from Engage, and €261.61 million from Globalize services.
Estimated Discount To Fair Value: 19.1%
Keywords Studios is trading at £24.46, below its estimated fair value of £30.22, indicating it may be undervalued based on cash flows. Despite a recent net loss of €30.88 million for the half year ending June 2024, earnings are forecast to grow significantly by 59.13% annually and revenue at 10.2% per year, outpacing the UK market's growth rate of 3.5%. The company is expected to become profitable within three years, although return on equity remains low at a forecasted 11.1%.
LBG Media
Overview: LBG Media plc is an online media publisher operating in the United Kingdom, Ireland, Australia, the United States, and internationally with a market cap of £282.26 million.
Operations: The company generates £82.54 million in revenue from its online media publishing industry across various regions, including the UK, Ireland, Australia, and the US.