Stock Analysis

3 ASX Stocks That Could Be Trading At A Discount

ASX:JDO
Source: Shutterstock

Over the last 7 days, the Australian market has experienced a 1.5% drop, though it remains up by 19% over the past year with earnings forecasted to grow by 12% annually. In this context, identifying stocks that may be trading at a discount can offer potential opportunities for investors looking to capitalize on undervalued assets in a growing market.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

NameCurrent PriceFair Value (Est)Discount (Est)
Data#3 (ASX:DTL)A$7.36A$13.4545.3%
Westgold Resources (ASX:WGX)A$3.32A$6.2847.1%
Praemium (ASX:PPS)A$0.635A$1.1946.8%
VEEM (ASX:VEE)A$1.675A$3.2247.9%
Ansell (ASX:ANN)A$31.43A$57.9545.8%
Ingenia Communities Group (ASX:INA)A$4.90A$9.3847.8%
Millennium Services Group (ASX:MIL)A$1.145A$2.2448.9%
Megaport (ASX:MP1)A$7.10A$13.4447.2%
Genesis Minerals (ASX:GMD)A$2.56A$4.8046.7%
Energy One (ASX:EOL)A$5.64A$11.0849.1%

Click here to see the full list of 46 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Here's a peek at a few of the choices from the screener.

Ansell (ASX:ANN)

Overview: Ansell Limited is a global company that designs, sources, develops, manufactures, distributes, and sells hand and body protection solutions across various regions including the Asia Pacific, Europe, the Middle East, Africa, Latin America, the Caribbean, and North America with a market cap of A$4.55 billion.

Operations: The company's revenue is derived from two main segments: Healthcare, contributing $834.20 million, and Industrial (Including Specialty Markets), accounting for $785.10 million.

Estimated Discount To Fair Value: 45.8%

Ansell is trading at A$31.43, significantly below its estimated fair value of A$57.95, indicating potential undervaluation based on cash flows. Despite a forecasted revenue growth of 6.7% per year and earnings expected to rise by 22.5% annually, recent financial results show a decline in profit margins and net income due to large one-off items. The CFO's upcoming resignation adds uncertainty, while shareholder dilution has occurred over the past year.

ASX:ANN Discounted Cash Flow as at Oct 2024
ASX:ANN Discounted Cash Flow as at Oct 2024

Judo Capital Holdings (ASX:JDO)

Overview: Judo Capital Holdings Limited, through its subsidiaries, provides a range of banking products and services tailored for small and medium businesses in Australia, with a market capitalization of A$2.09 billion.

Operations: Judo Capital Holdings Limited generates revenue of A$326.60 million from its banking segment, focusing on services for small and medium businesses in Australia.

Estimated Discount To Fair Value: 18%

Judo Capital Holdings, trading at A$1.87, is undervalued relative to its fair value estimate of A$2.28. Despite a modest 18% discount to fair value and projected earnings growth of 25.9% annually over the next three years, concerns arise from a high bad loans ratio of 2.8%. Recent financials show stable net interest income but a slight decline in net income year-over-year, while board changes introduce potential strategic shifts.

ASX:JDO Discounted Cash Flow as at Oct 2024
ASX:JDO Discounted Cash Flow as at Oct 2024

PWR Holdings (ASX:PWH)

Overview: PWR Holdings Limited specializes in the design, production, and sale of cooling products and solutions across various international markets, with a market cap of A$880.94 million.

Operations: The company's revenue segments include A$41.98 million from PWR C&R and A$111.26 million from PWR Performance Products.

Estimated Discount To Fair Value: 19.6%

PWR Holdings, trading at A$8.76, is slightly undervalued against its fair value estimate of A$10.9, with earnings projected to grow 14.99% annually, outpacing the Australian market's 12.3%. Recent financials show strong performance with sales increasing to A$97.53 million and net income rising to A$20.99 million for the year ending June 2024. Leadership changes include appointing Sharyn Williams as CFO in early 2025, which may influence strategic direction positively.

ASX:PWH Discounted Cash Flow as at Oct 2024
ASX:PWH Discounted Cash Flow as at Oct 2024

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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