3 ASX Stocks Estimated To Be Up To 45.2% Below Intrinsic Value

The Australian stock market recently experienced a downturn, with the ASX 200 closing 0.83% lower at 8,410 points, largely due to weak performances in the banking and energy sectors and external economic pressures like the administration of Whyalla steelworks. In this challenging environment, identifying undervalued stocks can be crucial for investors seeking opportunities; such stocks are often trading below their intrinsic value despite potential for future growth.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Name	Current Price	Fair Value (Est)	Discount (Est)
Whitehaven Coal (ASX:WHC)	A$5.19	A$9.59	45.9%
Mader Group (ASX:MAD)	A$6.16	A$11.19	45%
IDP Education (ASX:IEL)	A$12.26	A$24.06	49.1%
Atlas Arteria (ASX:ALX)	A$5.03	A$9.07	44.6%
Symal Group (ASX:SYL)	A$1.98	A$3.64	45.6%
ReadyTech Holdings (ASX:RDY)	A$3.19	A$5.68	43.8%
Alcidion Group (ASX:ALC)	A$0.086	A$0.16	46.6%
Integral Diagnostics (ASX:IDX)	A$2.99	A$5.74	47.9%
Adriatic Metals (ASX:ADT)	A$4.35	A$7.94	45.2%
Sandfire Resources (ASX:SFR)	A$10.73	A$19.21	44.1%

Click here to see the full list of 48 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Let's take a closer look at a couple of our picks from the screened companies.

Adriatic Metals (ASX:ADT)

Overview: Adriatic Metals PLC, with a market cap of A$1.31 billion, is involved in the exploration and development of precious and base metals through its subsidiaries.

Operations: Adriatic Metals PLC's revenue segments are not specified in the provided text.

Estimated Discount To Fair Value: 45.2%

Adriatic Metals is trading at A$4.35, significantly below its estimated fair value of A$7.94, suggesting it may be undervalued based on cash flows. The company forecasts strong revenue growth of 43.1% per year and expects to become profitable within three years, outperforming the broader market's growth rate. Recent equity offerings raised A$80 million, potentially enhancing its financial flexibility as production scales up at the Vares Silver Operation in Bosnia and Herzegovina.

• Our expertly prepared growth report on Adriatic Metals implies its future financial outlook may be stronger than recent results.
• Click here to discover the nuances of Adriatic Metals with our detailed financial health report.

Codan (ASX:CDA)

Overview: Codan Limited develops technology solutions for various sectors including United Nations organizations, security and military groups, government departments, individuals, and small-scale miners, with a market cap of A$3.13 billion.

Operations: The company generates revenue through its Communications segment, which accounts for A$326.91 million, and its Metal Detection segment, contributing A$219.85 million.

Estimated Discount To Fair Value: 32.2%

Codan is trading at A$17.14, well below its estimated fair value of A$25.27, indicating potential undervaluation based on cash flows. Its earnings are forecast to grow 17.9% annually, outpacing the broader Australian market's growth rate of 11.4%. Despite slower projected revenue growth at 11.1% per year compared to some high-growth sectors, Codan's strong return on equity forecast of 22.7% in three years underscores its robust financial health and potential for value appreciation.

• According our earnings growth report, there's an indication that Codan might be ready to expand.
• Take a closer look at Codan's balance sheet health here in our report.

Ingenia Communities Group (ASX:INA)

Overview: Ingenia Communities Group (ASX:INA) is a prominent operator, owner, and developer of residential communities and holiday accommodations with a market cap of A$2.36 billion.

Operations: The company's revenue segments include Tourism - Ingenia Holidays with A$134.84 million, Residential - Ingenia Gardens at A$23.67 million, Residential - Lifestyle Rental generating A$86.50 million, and Residential - Lifestyle Development contributing A$205.81 million, along with Fuel, Food & Beverage at A$19.26 million.

Estimated Discount To Fair Value: 34.7%

Ingenia Communities Group, trading at A$5.78, is significantly undervalued with a fair value estimate of A$8.85 based on cash flows. Earnings are projected to grow 25.21% annually, surpassing the Australian market's growth rate of 11.4%. Despite a lower profit margin and debt not well-covered by operating cash flow, Ingenia's raised earnings guidance for fiscal year 2025 and potential strategic acquisitions highlight its prospects for improved financial performance and shareholder value creation.

• Our growth report here indicates Ingenia Communities Group may be poised for an improving outlook.
• Delve into the full analysis health report here for a deeper understanding of Ingenia Communities Group.

Make It Happen

• Unlock our comprehensive list of 48 Undervalued ASX Stocks Based On Cash Flows by clicking here.
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Curious About Other Options?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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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