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The UK market has recently faced challenges, with the FTSE 100 index experiencing declines due to weak trade data from China, highlighting concerns over global economic recovery. In this environment, identifying stocks that are trading below their fair value can offer potential opportunities for investors seeking resilience amid broader market uncertainties.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Gaming Realms (AIM:GMR) | £0.369 | £0.73 | 49.3% |
| Fevertree Drinks (AIM:FEVR) | £6.97 | £12.73 | 45.2% |
| GlobalData (AIM:DATA) | £2.02 | £3.71 | 45.6% |
| On the Beach Group (LSE:OTB) | £1.676 | £3.00 | 44.1% |
| Informa (LSE:INF) | £8.566 | £15.40 | 44.4% |
| Nexxen International (AIM:NEXN) | £3.87 | £7.55 | 48.7% |
| St. James's Place (LSE:STJ) | £9.02 | £16.42 | 45.1% |
| Videndum (LSE:VID) | £2.58 | £4.64 | 44.4% |
| Calnex Solutions (AIM:CLX) | £0.61 | £1.05 | 42.2% |
| Genel Energy (LSE:GENL) | £0.85 | £1.55 | 45.2% |
Let's dive into some prime choices out of the screener.
Dr. Martens
Overview: Dr. Martens plc designs, develops, procures, markets, sells, and distributes footwear under the Dr. Martens brand with a market cap of £664.53 million.
Operations: The company generates revenue primarily from its footwear segment, amounting to £805.90 million.
Estimated Discount To Fair Value: 11.4%
Dr. Martens is trading at 11.4% below its estimated fair value, indicating potential undervaluation based on cash flows. Despite a challenging first half of 2024 with a net loss of £20.8 million, earnings are forecast to grow significantly at 40.5% annually, outpacing the UK market average. However, profit margins have decreased from last year and interest payments are not well covered by earnings, suggesting financial challenges amid leadership changes set for January 2025.
Fresnillo
Overview: Fresnillo plc is a company that mines, develops, and produces non-ferrous minerals in Mexico with a market cap of approximately £4.76 billion.
Operations: The company's revenue segments include Cienega with $195.82 million, Saucito at $607.29 million, Fresnillo generating $439.76 million, Herradura contributing $633.78 million, Juanicipio at $546.80 million, SAN Julian with $404.32 million, and Noche Buena providing $56.24 million in revenue.
Estimated Discount To Fair Value: 12.4%
Fresnillo is trading at £6.46, below its estimated fair value of £7.37, highlighting potential undervaluation based on cash flows. Recent production increases in gold and silver support this view, although earnings growth is expected to significantly outpace revenue growth over the next three years. Despite a low forecasted return on equity of 9.5%, Fresnillo's earnings are projected to grow at 33% annually, surpassing UK market averages and reflecting robust future profitability prospects.