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The United Kingdom's FTSE 100 index has recently faced challenges, closing lower amid weak trade data from China and concerns about the global economic recovery. In this environment, identifying undervalued stocks becomes crucial as investors seek opportunities that may offer potential value despite broader market pressures.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| GlobalData (AIM:DATA) | £2.00 | £3.72 | 46.2% |
| JD Sports Fashion (LSE:JD.) | £1.3865 | £2.75 | 49.7% |
| Tracsis (AIM:TRCS) | £5.35 | £9.97 | 46.3% |
| Redcentric (AIM:RCN) | £1.3075 | £2.43 | 46.1% |
| Videndum (LSE:VID) | £2.54 | £4.60 | 44.8% |
| Foxtons Group (LSE:FOXT) | £0.63 | £1.20 | 47.4% |
| SysGroup (AIM:SYS) | £0.33 | £0.65 | 49.2% |
| Hochschild Mining (LSE:HOC) | £1.89 | £3.56 | 46.9% |
| BATM Advanced Communications (LSE:BVC) | £0.1985 | £0.37 | 46.1% |
| Genel Energy (LSE:GENL) | £0.772 | £1.50 | 48.4% |
Below we spotlight a couple of our favorites from our exclusive screener.
Babcock International Group
Overview: Babcock International Group PLC is involved in the design, development, manufacture, and integration of specialist systems for aerospace, defense, and security across various regions including the UK and internationally, with a market cap of £2.42 billion.
Operations: The company's revenue is derived from four main segments: Land (£1.10 billion), Marine (£1.43 billion), Nuclear (£1.52 billion), and Aviation (£341.50 million).
Estimated Discount To Fair Value: 30%
Babcock International Group is trading at approximately 30% below its estimated fair value of £6.88 per share, making it highly undervalued based on discounted cash flow analysis. Despite a high debt level, the company has returned to profitability with net income reaching £165.7 million for FY24. Earnings are forecast to grow annually by 15.3%, outpacing the UK market average, while revenue growth remains modest at 4% per year.
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Our growth report here indicates Babcock International Group may be poised for an improving outlook.
Barratt Developments
Overview: Barratt Developments plc operates in the housebuilding industry within the United Kingdom and has a market capitalization of approximately £6.96 billion.
Operations: The company generates revenue primarily from its housebuilding segment, which amounts to £4.17 billion.
Estimated Discount To Fair Value: 34.6%
Barratt Developments is trading 34.6% below its estimated fair value of £7.37, highlighting its undervaluation based on discounted cash flow analysis. Despite a challenging year with sales dropping to £4.17 billion from £5.32 billion and net income falling to £114.1 million, earnings are projected to grow significantly at 44.5% annually, surpassing UK market averages. However, dividends have been reduced due to lower earnings coverage and recent shareholder dilution remains a concern.