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The Australian market has shown robust performance, with a notable 10% increase over the past year and the Utilities sector alone gaining 4.1% in just the last week. In such a thriving environment, stocks trading below their intrinsic value present compelling opportunities for investors looking to capitalize on potential growth and earnings forecasted to rise by 14% annually.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
Name | Current Price | Fair Value (Est) | Discount (Est) |
LaserBond (ASX:LBL) | A$0.71 | A$1.21 | 41.3% |
COSOL (ASX:COS) | A$1.23 | A$2.43 | 49.3% |
Charter Hall Group (ASX:CHC) | A$12.10 | A$22.43 | 46% |
ReadyTech Holdings (ASX:RDY) | A$3.17 | A$5.96 | 46.8% |
hipages Group Holdings (ASX:HPG) | A$1.045 | A$1.94 | 46.2% |
Regal Partners (ASX:RPL) | A$3.24 | A$6.17 | 47.5% |
IPH (ASX:IPH) | A$6.45 | A$11.37 | 43.3% |
Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
South32 (ASX:S32) | A$3.64 | A$6.12 | 40.5% |
Treasury Wine Estates (ASX:TWE) | A$12.42 | A$21.36 | 41.9% |
Let's explore several standout options from the results in the screener
Collins Foods
Overview: Collins Foods Limited operates, manages, and administers restaurants across Australia, Europe, and Asia with a market capitalization of approximately A$1.08 billion.
Operations: The company generates revenue through its KFC restaurants in Australia (A$1.09 billion), KFC restaurants in Europe (A$287.06 million), and Taco Bell restaurants (A$52.65 million).
Estimated Discount To Fair Value: 36.8%
Collins Foods, trading at A$9.32, is considered undervalued based on DCF analysis, with a fair value estimated at A$14.75, indicating significant potential upside. Despite recent executive changes with CEO Drew O'Malley stepping down and Kevin Perkins serving as interim CEO, the company's financial outlook remains robust. Analysts predict a 20.53% annual earnings growth over the next three years and revenue growth forecasts outpacing the Australian market average. However, its dividends are poorly covered by earnings and profit margins have declined from last year.
Domino's Pizza Enterprises
Overview: Domino's Pizza Enterprises Limited runs a chain of pizza delivery and carryout restaurants, with a market capitalization of approximately A$3.32 billion.
Operations: The company generates its revenue primarily from its network of pizza restaurants, which brought in A$2.48 billion.