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The United Kingdom's stock market has recently faced challenges, with the FTSE 100 index experiencing declines due to weak trade data from China and its impact on global economic sentiment. As investors navigate these turbulent conditions, identifying stocks that may be undervalued becomes crucial, as they could offer potential opportunities amidst broader market uncertainties.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Eurocell (LSE:ECEL) | £1.55 | £3.04 | 49% |
| On the Beach Group (LSE:OTB) | £2.32 | £4.59 | 49.5% |
| Informa (LSE:INF) | £7.858 | £15.47 | 49.2% |
| JD Sports Fashion (LSE:JD.) | £0.7982 | £1.53 | 48% |
| Victrex (LSE:VCT) | £9.65 | £18.30 | 47.3% |
| AstraZeneca (LSE:AZN) | £118.08 | £217.85 | 45.8% |
| Likewise Group (AIM:LIKE) | £0.185 | £0.37 | 49.9% |
| Vanquis Banking Group (LSE:VANQ) | £0.585 | £1.13 | 48.4% |
| TI Fluid Systems (LSE:TIFS) | £1.968 | £3.75 | 47.5% |
| Kromek Group (AIM:KMK) | £0.0565 | £0.11 | 49.8% |
Below we spotlight a couple of our favorites from our exclusive screener.
Bellway
Overview: Bellway p.l.c., along with its subsidiaries, operates in the homebuilding sector across the United Kingdom and has a market capitalization of approximately £2.77 billion.
Operations: The company's revenue is primarily derived from its UK House Building segment, which generated £2.38 billion.
Estimated Discount To Fair Value: 18.6%
Bellway is trading at £23.38, below its estimated fair value of £28.73, indicating potential undervaluation based on cash flows. While earnings are forecast to grow significantly at 21.3% annually, revenue growth is expected to be moderate at 9.7%, outpacing the UK market's average but trailing behind more aggressive targets. Despite a low return on equity forecast and profit margins declining from last year, analysts anticipate a stock price increase of 33.6%.
Phoenix Group Holdings
Overview: Phoenix Group Holdings plc operates in the long-term savings and retirement business in Europe, with a market cap of approximately £5.77 billion.
Operations: The company's revenue segments include With-profits (£429 million), Europe and Other (£659 million), Pensions & Savings (£1.16 billion), and Retirement Solutions (£3.92 billion).
Estimated Discount To Fair Value: 27.8%
Phoenix Group Holdings is trading at £5.78, significantly below its estimated fair value of £8, highlighting potential undervaluation based on cash flows. Despite a reported net loss of £1.09 billion for 2024, the company is forecast to become profitable in three years with high return on equity projections. However, revenue is expected to decline by 25.9% annually over the next three years, and the dividend yield of 9.47% isn't well covered by earnings.