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As the ASX200 edges higher, closing up 0.12% at 7,934 points, investors are closely watching sector performances with Real Estate leading the charge and Materials lagging behind. In this mixed market environment, identifying stocks that may be trading below their estimated value can offer potential opportunities for growth and diversification in portfolios.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Acrow (ASX:ACF) | A$1.07 | A$2.01 | 46.6% |
| Nido Education (ASX:NDO) | A$0.80 | A$1.57 | 49.1% |
| Champion Iron (ASX:CIA) | A$4.77 | A$9.07 | 47.4% |
| PolyNovo (ASX:PNV) | A$1.14 | A$2.11 | 46.1% |
| Environmental Group (ASX:EGL) | A$0.25 | A$0.46 | 45.8% |
| SciDev (ASX:SDV) | A$0.44 | A$0.82 | 46.1% |
| Genetic Signatures (ASX:GSS) | A$0.475 | A$0.88 | 45.8% |
| Charter Hall Group (ASX:CHC) | A$17.32 | A$31.94 | 45.8% |
| Integral Diagnostics (ASX:IDX) | A$2.27 | A$3.97 | 42.8% |
| Pantoro (ASX:PNR) | A$0.16 | A$0.28 | 43.6% |
Underneath we present a selection of stocks filtered out by our screen.
Champion Iron
Overview: Champion Iron Limited focuses on the acquisition, exploration, development, and production of iron ore deposits in Canada with a market cap of A$2.47 billion.
Operations: The company's revenue is primarily derived from its iron ore concentrate segment, amounting to CA$1.51 billion.
Estimated Discount To Fair Value: 47.4%
Champion Iron is trading at A$4.77, significantly below its estimated fair value of A$9.07, indicating potential undervaluation based on cash flows. Despite a forecasted earnings growth rate of 21.8% annually, surpassing the Australian market's 11.7%, recent financial results show declining net income and profit margins compared to the previous year. The company's high debt level and unsustainable dividend coverage by free cash flows present challenges despite positive analyst sentiment for price appreciation by 50.5%.
Infomedia
Overview: Infomedia Ltd is a technology company that provides electronic parts catalogues, service quoting software, and e-commerce solutions for the global automotive industry, with a market cap of A$481.54 million.
Operations: The company's revenue segment includes A$142.41 million from publishing periodicals related to the automotive sector.
Estimated Discount To Fair Value: 37%
Infomedia is trading at A$1.29, below its estimated fair value of A$2.04, suggesting undervaluation based on cash flows. The company reported a net income increase to A$8.33 million for the half-year ending December 2024, with earnings growing 61.3% year-over-year. Analysts forecast earnings growth of 20% annually, outpacing the Australian market's average growth rate; however, the dividend yield of 3.27% is not well covered by current earnings levels.