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Amidst a buoyant FTSE 100, which is poised for an uptick as Labour leads in the election polls, the UK's financial markets exhibit a robust outlook. In such a market environment, identifying stocks that appear undervalued relative to their intrinsic worth could present compelling opportunities for investors.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Kier Group (LSE:KIE) | £1.39 | £2.76 | 49.6% |
| Halfords Group (LSE:HFD) | £1.51 | £2.81 | 46.3% |
| WPP (LSE:WPP) | £7.404 | £14.03 | 47.2% |
| Ibstock (LSE:IBST) | £1.722 | £3.38 | 49.1% |
| LSL Property Services (LSE:LSL) | £3.33 | £6.50 | 48.7% |
| Auction Technology Group (LSE:ATG) | £4.825 | £9.21 | 47.6% |
| Ricardo (LSE:RCDO) | £4.90 | £9.52 | 48.5% |
| Entain (LSE:ENT) | £6.342 | £12.29 | 48.4% |
| Accsys Technologies (AIM:AXS) | £0.554 | £1.05 | 47.4% |
| Nexxen International (AIM:NEXN) | £2.44 | £4.77 | 48.9% |
Let's explore several standout options from the results in the screener
Nexxen International
Overview: Nexxen International Ltd. is a company based in Israel that offers a comprehensive software platform facilitating connections between advertisers and publishers, with a market capitalization of approximately £338.11 million.
Operations: The company generates revenue primarily through its marketing services segment, totaling $334.69 million.
Estimated Discount To Fair Value: 48.9%
Nexxen International, currently trading at £2.44, is significantly undervalued by more than 20%, with a fair value estimated at £4.77. Despite slower revenue growth projections of 7.8% annually compared to the market's 20%, it outpaces the UK average of 3.5%. The company is on track to become profitable within three years, boasting an impressive earnings growth forecast of 117.92% per year. Recent strategic moves include reaffirming its full-year earnings guidance and active share buybacks totaling £19.99 million, enhancing shareholder value and financial stability.
Energean
Overview: Energean plc is a company focused on the exploration, production, and development of oil and gas, with a market capitalization of approximately £1.85 billion.
Operations: The company generates revenue primarily from its oil and gas exploration and production segment, totaling $1.42 billion.
Estimated Discount To Fair Value: 29.6%
Energean, priced at £10.09, is valued below its fair value of £14.33 and shows a potential price increase of 38.7% according to analysts. Despite a dividend yield of 9.32%, it's poorly backed by earnings and cash flows, reflecting some financial risk amidst its debt levels. However, the company's earnings have surged by a very large margin over the past year and are expected to grow annually at 16.9%, outpacing the UK market forecast of 12.5%. Recent announcements include a stable quarterly dividend and positive production guidance for 2024, signaling operational growth.