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As the UK market grapples with challenges stemming from weaker trade data from China, the FTSE 100 and FTSE 250 indices have experienced declines, reflecting broader global economic uncertainties. In such an environment, identifying undervalued stocks becomes crucial for investors seeking potential opportunities amidst market volatility.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Gaming Realms (AIM:GMR) | £0.36 | £0.66 | 45.6% |
| On the Beach Group (LSE:OTB) | £2.345 | £4.64 | 49.4% |
| Informa (LSE:INF) | £7.86 | £15.52 | 49.3% |
| JD Sports Fashion (LSE:JD.) | £0.7952 | £1.54 | 48.4% |
| Victrex (LSE:VCT) | £9.84 | £18.31 | 46.3% |
| AstraZeneca (LSE:AZN) | £117.84 | £217.33 | 45.8% |
| Likewise Group (AIM:LIKE) | £0.185 | £0.37 | 49.8% |
| Harbour Energy (LSE:HBR) | £1.974 | £3.69 | 46.5% |
| TI Fluid Systems (LSE:TIFS) | £1.97 | £3.76 | 47.7% |
| Kromek Group (AIM:KMK) | £0.0585 | £0.11 | 48.5% |
Below we spotlight a couple of our favorites from our exclusive screener.
DFS Furniture
Overview: DFS Furniture plc designs, manufactures, delivers, installs, and retails upholstered furniture in the United Kingdom and the Republic of Ireland with a market cap of £325.27 million.
Operations: The company's revenue segments include £784 million from DFS and £212.50 million from Sofology.
Estimated Discount To Fair Value: 12.9%
DFS Furniture is trading at £1.41, slightly undervalued compared to its estimated fair value of £1.62, with expected earnings growth of 63% annually outpacing the UK market. Despite a lower net profit margin than last year and interest payments not well covered by earnings, recent results show improved net income to £11.8 million from £0.6 million year-on-year. Revenue forecasts indicate moderate growth at 5.4% per year, above the UK market average but below high-growth benchmarks.
Informa
Overview: Informa plc is an international company that specializes in events, digital services, and academic research across the UK, Continental Europe, the US, China, and other global markets with a market cap of £10.38 billion.
Operations: The company's revenue segments include Informa Tech (£423.90 million), Informa Connect (£631 million), Informa Markets (£1.72 billion), and Taylor & Francis (£698.20 million).
Estimated Discount To Fair Value: 49.3%
Informa is trading at £7.86, significantly below its estimated fair value of £15.52, suggesting it may be undervalued based on cash flows. Despite a decline in net profit margin from 13.1% to 8.4%, earnings are expected to grow substantially at 23.3% annually, outpacing the UK market's growth rate of 14.2%. The company has completed a share buyback worth £1,489.5 million and announced increased dividends for fiscal year 2024, indicating robust cash flow management amidst slower revenue growth forecasts of 8.4%.