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As the United Kingdom's FTSE 100 index faces pressure from weak trade data out of China and global economic uncertainties, investors are closely monitoring opportunities within the market. In such a challenging environment, identifying stocks that may be undervalued can provide potential for growth, as these companies might be priced below their estimated intrinsic value despite broader market fluctuations.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| QinetiQ Group (LSE:QQ.) | £4.26 | £7.67 | 44.4% |
| Begbies Traynor Group (AIM:BEG) | £0.936 | £1.68 | 44.2% |
| AstraZeneca (LSE:AZN) | £101.34 | £191.58 | 47.1% |
| Aptitude Software Group (LSE:APTD) | £2.91 | £5.20 | 44% |
| On the Beach Group (LSE:OTB) | £2.80 | £5.00 | 44% |
| Duke Capital (AIM:DUKE) | £0.2825 | £0.54 | 47.9% |
| ECO Animal Health Group (AIM:EAH) | £0.64 | £1.28 | 49.9% |
| Vistry Group (LSE:VTY) | £6.238 | £11.36 | 45.1% |
| Deliveroo (LSE:ROO) | £1.747 | £3.22 | 45.7% |
| Crest Nicholson Holdings (LSE:CRST) | £1.97 | £3.84 | 48.7% |
Let's dive into some prime choices out of the screener.
Burford Capital
Overview: Burford Capital Limited offers legal finance products and services globally, with a market cap of £2.32 billion.
Operations: Burford Capital Limited generates revenue through its global provision of legal finance products and services.
Estimated Discount To Fair Value: 24.5%
Burford Capital appears undervalued, trading 24.5% below its estimated fair value of £14.08. Recent earnings show a substantial turnaround with a net income of US$30.93 million in Q1 2025, compared to a loss the previous year. Earnings are forecasted to grow significantly at 28.1% annually, outpacing the UK market's 14.2%. However, revenue growth is expected to be moderate at 12.6%, and return on equity remains low at an anticipated 10.2%.
Coats Group
Overview: Coats Group plc, with a market cap of £1.17 billion, operates globally in the manufacturing of threads, structural components for apparel and footwear, and performance materials.
Operations: The company's revenue segments include $769.80 million from apparel, $403.50 million from footwear, and $327.60 million from performance materials.
Estimated Discount To Fair Value: 36.7%
Coats Group is trading 36.7% below its estimated fair value of £1.16, highlighting potential undervaluation based on cash flows. The company's strategic exit from non-core operations in the Americas Yarns business is expected to enhance EBIT margins and generate modest cash inflow, aligning with its focus on core growth areas. Despite unstable dividends and high debt relative to operating cash flow, earnings are projected to grow faster than the UK market at 18.1% annually.