3 ASX Stocks That Could Be Trading At Discounts Of Up To 49.7%

The Australian market has recently experienced a boost in sentiment, buoyed by news of a US Senate deal to end the government shutdown and positive movements in US futures, with the ASX200 seeing gains led by sectors like Information Technology. In this environment of cautious optimism and sector-specific performance, identifying undervalued stocks can present opportunities for investors seeking potential discounts amidst broader market fluctuations.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Click here to see the full list of 30 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

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

LGI (ASX:LGI)

Overview: LGI Limited specializes in carbon abatement and renewable energy solutions using biogas from landfill sites in Australia, with a market cap of A$456.57 million.

Operations: The company's revenue is derived from three main segments: Carbon Abatement (A$17.29 million), Renewable Energy (A$17.08 million), and Infrastructure Construction and Management (A$2.37 million).

Estimated Discount To Fair Value: 49.7%

LGI Limited is trading at A$4.4, significantly below its estimated fair value of A$8.75, presenting a potential undervaluation based on cash flows. Despite recent shareholder dilution, LGI's earnings are forecast to grow by 25.6% annually over the next three years, outpacing the broader Australian market's growth rate of 11.7%. The company recently completed a follow-on equity offering and is expanding its energy portfolio with a new grid-scale battery project in Sydney.

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

Myer Holdings (ASX:MYR)

Overview: Myer Holdings Limited operates department stores in Australia and New Zealand, with a market cap of A$692.30 million.

Operations: The company's revenue is primarily derived from Myer Retail, which accounts for A$2.64 billion, and Myer Apparel Brands, contributing A$370.60 million.

Estimated Discount To Fair Value: 20.8%

Myer Holdings, trading at A$0.4, is significantly undervalued based on cash flow analysis with a fair value estimate of A$0.5. The company reported a revenue increase to A$3 billion for the year ended July 2025, but faced a net loss of A$211.2 million compared to last year's profit. Analysts anticipate revenue growth of 7.5% annually and profitability within three years, despite the current low return on equity forecasted at 10.7%. Recent investor activism involves Stephen Mayne's board nomination challenge.

• The growth report we've compiled suggests that Myer Holdings' future prospects could be on the up.
• Click here to discover the nuances of Myer Holdings with our detailed financial health report.

Nick Scali (ASX:NCK)

Overview: Nick Scali Limited, with a market cap of A$2.06 billion, is involved in the sourcing and retailing of household furniture and related accessories across Australia, New Zealand, and the United Kingdom.

Operations: The company's revenue is primarily derived from the retailing of furniture, amounting to A$495.28 million.

Estimated Discount To Fair Value: 18.4%

Nick Scali, priced at A$24.11, is trading below its fair value estimate of A$29.55, reflecting potential undervaluation based on cash flows. Earnings are expected to grow 15.5% annually, outpacing the broader Australian market's 11.7%, though profit margins have declined from last year. Recent board changes include Anthony Scali becoming Executive Chair and Niran Peiris joining as an independent director, which may influence strategic direction and governance stability moving forward.

• Our comprehensive growth report raises the possibility that Nick Scali is poised for substantial financial growth.
• Click here and access our complete balance sheet health report to understand the dynamics of Nick Scali.

Make It Happen

• Investigate our full lineup of 30 Undervalued ASX Stocks Based On Cash Flows right here.
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Ready To Venture Into Other Investment Styles?

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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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