3 UK Stocks Estimated To Be Up To 48.2% Below Intrinsic Value

The United Kingdom's stock market has recently faced challenges, with the FTSE 100 and FTSE 250 indices closing lower amid concerns over China's sluggish economic recovery and its impact on global trade. Despite these headwinds, opportunities may exist for investors seeking undervalued stocks that are trading below their intrinsic value, potentially offering growth potential in a turbulent market environment.

Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom

Name	Current Price	Fair Value (Est)	Discount (Est)
National World (LSE:NWOR)	£0.227	£0.42	46.5%
On the Beach Group (LSE:OTB)	£2.60	£4.63	43.8%
Brickability Group (AIM:BRCK)	£0.588	£1.04	43.7%
Gateley (Holdings) (AIM:GTLY)	£1.36	£2.65	48.6%
Victrex (LSE:VCT)	£9.55	£18.19	47.5%
Duke Capital (AIM:DUKE)	£0.302	£0.53	43.4%
Deliveroo (LSE:ROO)	£1.39	£2.45	43.2%
Nexxen International (AIM:NEXN)	£7.75	£14.97	48.2%
Optima Health (AIM:OPT)	£1.73	£3.31	47.7%
Melrose Industries (LSE:MRO)	£6.284	£11.92	47.3%

Click here to see the full list of 54 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Nexxen International (AIM:NEXN)

Overview: Nexxen International Ltd. offers a comprehensive software platform facilitating connections between advertisers and publishers, with a market cap of £500.27 million.

Operations: The company generates revenue from its marketing services, amounting to $349.11 million.

Estimated Discount To Fair Value: 48.2%

Nexxen International appears undervalued, trading at £7.75, significantly below its estimated fair value of £14.97. The company recently became profitable and forecasts suggest robust annual earnings growth of 38.72% over the next three years, outpacing the UK market average of 15%. Revenue is also expected to grow faster than the market at 9.2% annually. Recent strategic initiatives include launching Nexxen U for industry education and a $50 million share buyback program funded from existing cash reserves.

• Our growth report here indicates Nexxen International may be poised for an improving outlook.
• Take a closer look at Nexxen International's balance sheet health here in our report.

Foresight Group Holdings (LSE:FSG)

Overview: Foresight Group Holdings Limited is an infrastructure and private equity manager operating in the United Kingdom, Italy, Luxembourg, Ireland, Spain, and Australia with a market cap of £451.13 million.

Operations: The company's revenue segments include Infrastructure (£87.79 million), Private Equity (£50.78 million), and Foresight Capital Management (£8.10 million).

Estimated Discount To Fair Value: 30.4%

Foresight Group Holdings is trading at £3.97, significantly below its estimated fair value of £5.7, offering potential value based on cash flows. The company reported strong earnings growth with net income rising to £12.65 million from £8.49 million year-over-year and forecasts suggest annual profit growth of 27%, surpassing the UK market average of 15%. Recent developments include an increased buyback plan and a new role as sub-investment manager for a diversified real assets fund.

• The analysis detailed in our Foresight Group Holdings growth report hints at robust future financial performance.
• Click to explore a detailed breakdown of our findings in Foresight Group Holdings' balance sheet health report.

Melrose Industries (LSE:MRO)

Overview: Melrose Industries PLC, with a market cap of £8.07 billion, provides aerospace components and systems to civil and defence markets globally, including the United Kingdom, Europe, and North America.

Operations: The company's revenue is derived from two main segments: Engines, contributing £1.31 billion, and Structures, accounting for £2.15 billion.

Estimated Discount To Fair Value: 47.3%

Melrose Industries is trading at £6.28, significantly below its estimated fair value of £11.92, indicating substantial potential based on cash flows. The company is forecast to achieve profitability within three years, with earnings expected to grow over 100% annually. Recent revenue growth of 7% was driven by strong aftermarket performance in Engines despite challenges in Structures due to reduced original equipment volumes and customer destocking effects.

• Insights from our recent growth report point to a promising forecast for Melrose Industries' business outlook.
• Get an in-depth perspective on Melrose Industries' balance sheet by reading our health report here.

Turning Ideas Into Actions

• Unlock more gems! Our Undervalued UK Stocks Based On Cash Flows screener has unearthed 51 more companies for you to explore.Click here to unveil our expertly curated list of 54 Undervalued UK Stocks Based On Cash Flows.
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Interested In Other Possibilities?

• 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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