3 ASX Stocks Estimated To Be Trading Below Fair Value

Over the last 7 days, the Australian market has risen 2.2%, and in the past year, it has climbed 6.6%, with earnings expected to grow by 13% per annum over the next few years. In this environment, identifying stocks that are trading below their fair value can offer significant opportunities for investors seeking to capitalize on potential market gains.

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$1.37	48.3%
Elders (ASX:ELD)	A$9.08	A$18.11	49.9%
Telix Pharmaceuticals (ASX:TLX)	A$17.96	A$33.23	45.9%
Regal Partners (ASX:RPL)	A$3.30	A$6.40	48.4%
Domino's Pizza Enterprises (ASX:DMP)	A$32.21	A$63.68	49.4%
Infomedia (ASX:IFM)	A$1.655	A$3.06	45.9%
HMC Capital (ASX:HMC)	A$7.80	A$13.79	43.4%
Millennium Services Group (ASX:MIL)	A$1.145	A$2.24	48.9%
Little Green Pharma (ASX:LGP)	A$0.094	A$0.17	44.5%
Airtasker (ASX:ART)	A$0.29	A$0.52	44.7%

Click here to see the full list of 34 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

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

HMC Capital (ASX:HMC)

Overview: HMC Capital Limited, with a market cap of A$2.94 billion, owns and manages real estate-focused funds in Australia through its subsidiaries.

Operations: HMC Capital generates revenue primarily from its real estate-focused funds in Australia, with a segment adjustment of A$80.29 million.

Estimated Discount To Fair Value: 43.4%

HMC Capital is trading at A$7.8, significantly below its estimated fair value of A$13.79, indicating it may be undervalued based on cash flows. Despite recent shareholder dilution from equity offerings totaling over A$188 million, HMC's revenue is forecast to grow 20.1% annually, outpacing the Australian market's 5.1%. Earnings are projected to grow 16.7% per year, faster than the market average of 12.8%, although return on equity remains low at a forecasted 10.6%.

• Our growth report here indicates HMC Capital may be poised for an improving outlook.
• Click here and access our complete balance sheet health report to understand the dynamics of HMC Capital.

Regal Partners (ASX:RPL)

Overview: Regal Partners Limited, with a market cap of A$1.05 billion, is a privately owned hedge fund sponsor.

Operations: Regal Partners Limited generates its revenue primarily through the provision of investment management services, amounting to A$105.28 million.

Estimated Discount To Fair Value: 48.4%

Regal Partners is trading at A$3.3, well below its estimated fair value of A$6.4, suggesting it is undervalued based on cash flows. Earnings are forecast to grow 40.7% annually, significantly outpacing the Australian market's 12.8%. However, profit margins have declined from 14.1% to 1.5%, and there has been significant insider selling recently. Additionally, the dividend yield of 3.03% is not well covered by earnings or free cash flows.

• Our expertly prepared growth report on Regal Partners implies its future financial outlook may be stronger than recent results.
• Navigate through the intricacies of Regal Partners with our comprehensive financial health report here.

Temple & Webster Group (ASX:TPW)

Overview: Temple & Webster Group Ltd (ASX:TPW) operates as an online retailer of furniture, homewares, and home improvement products in Australia, with a market cap of A$1.39 billion.

Operations: Temple & Webster Group Ltd generates revenue primarily from the online sale of furniture, homewares, and home improvement products within Australia.

Estimated Discount To Fair Value: 16.7%

Temple & Webster Group reported A$497.8 million in sales for FY 2024, up from A$395.5 million the previous year, but net income fell to A$1.8 million from A$8.3 million. The company is trading at a 16.7% discount to its estimated fair value of A$14.05 per share and has forecasted annual earnings growth of 62%, outpacing market averages significantly. Despite lower profit margins, revenue is expected to grow at 17.7% annually, indicating potential undervaluation based on cash flows.

• Our earnings growth report unveils the potential for significant increases in Temple & Webster Group's future results.
• Get an in-depth perspective on Temple & Webster Group's balance sheet by reading our health report here.

Taking Advantage

• Click this link to deep-dive into the 34 companies within our Undervalued ASX Stocks Based On Cash Flows screener.
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Seeking Other Investments?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
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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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