In This Article:
Over the last 7 days, the Australian market has dropped 1.7%, but it has risen by 10% over the past year, with earnings expected to grow by 12% per annum in the coming years. In this context, identifying stocks trading below their fair value can be a strategic move for investors looking to capitalize on potential growth opportunities.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Elders (ASX:ELD) | A$9.26 | A$18.11 | 48.9% |
| Hansen Technologies (ASX:HSN) | A$4.37 | A$8.20 | 46.7% |
| Duratec (ASX:DUR) | A$1.40 | A$2.62 | 46.6% |
| HMC Capital (ASX:HMC) | A$7.92 | A$15.49 | 48.9% |
| Ansell (ASX:ANN) | A$29.73 | A$57.47 | 48.3% |
| Charter Hall Group (ASX:CHC) | A$15.79 | A$29.58 | 46.6% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Genesis Minerals (ASX:GMD) | A$2.11 | A$4.04 | 47.7% |
| Clover (ASX:CLV) | A$0.375 | A$0.72 | 48.1% |
| Superloop (ASX:SLC) | A$1.735 | A$3.31 | 47.7% |
We'll examine a selection from our screener results.
Charter Hall Group
Overview: Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property investment and funds management groups, with a market cap of A$7.47 billion.
Operations: Charter Hall's revenue segments include A$448.60 million from Funds Management, A$322.80 million from Property Investments, and A$73.30 million from Development Investments.
Estimated Discount To Fair Value: 46.6%
Charter Hall Group appears undervalued based on cash flows, trading at A$15.79 against a fair value estimate of A$29.58. Despite a recent net loss of A$222.1 million and declining revenue, earnings are forecast to grow 31.51% annually with expected profitability in three years. The company also announced FY25 earnings guidance for post-tax operating earnings per security of approximately 79 cents and distribution growth of 6%, indicating potential recovery and value appreciation ahead.
Lynas Rare Earths
Overview: Lynas Rare Earths Limited, with a market cap of A$6.58 billion, is involved in the exploration, development, mining, extraction, and processing of rare earth minerals in Australia and Malaysia.
Operations: Revenue from rare earth operations for the company amounts to A$463.29 million.
Estimated Discount To Fair Value: 36.2%
Lynas Rare Earths appears undervalued based on cash flows, trading at A$7.04 against a fair value estimate of A$11.04. Despite a significant drop in sales and net income for FY 2024, with sales at A$463.29 million and net income at A$84.51 million, earnings are forecast to grow 42.91% annually over the next three years, outpacing the Australian market's growth rate of 12.1%.