ASX's Top 3 Estimated Undervalued Stocks For September 2024
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In the last week, the Australian market has been flat, but over the past 12 months, it has risen by 10%, with earnings expected to grow by 12% annually in the coming years. In this context, identifying undervalued stocks can offer significant opportunities for investors looking to capitalize on potential growth at a reasonable price.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Duratec (ASX:DUR) | A$1.30 | A$2.59 | 49.9% |
| Elders (ASX:ELD) | A$9.28 | A$18.11 | 48.8% |
| Hansen Technologies (ASX:HSN) | A$4.24 | A$8.21 | 48.3% |
| DroneShield (ASX:DRO) | A$1.40 | A$2.70 | 48.2% |
| Mader Group (ASX:MAD) | A$5.48 | A$10.53 | 48% |
| Cettire (ASX:CTT) | A$1.54 | A$2.97 | 48.2% |
| Atlas Arteria (ASX:ALX) | A$5.16 | A$10.09 | 48.9% |
| VEEM (ASX:VEE) | A$1.705 | A$3.24 | 47.5% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Superloop (ASX:SLC) | A$1.69 | A$3.31 | 49% |
Below we spotlight a couple of our favorites from our exclusive screener.
Atlas Arteria
Overview: Atlas Arteria Limited (ASX:ALX) owns, develops, and operates toll roads with a market cap of A$7.49 billion.
Operations: Atlas Arteria's revenue segments include APRR (A$1.70 billion), ADELAC (A$36.90 million), Warnow Tunnel (A$25.10 million), Chicago Skyway (A$128.90 million), and Dulles Greenway (A$115 million).
Estimated Discount To Fair Value: 48.9%
Atlas Arteria (A$5.16) is trading at 48.9% below its estimated fair value of A$10.09, highlighting significant undervaluation based on discounted cash flow analysis. Despite a high dividend yield of 7.75%, it isn't well-covered by earnings or free cash flows, raising sustainability concerns. However, the company's earnings are forecast to grow significantly at 20.3% per year over the next three years, outpacing the broader Australian market's growth rate of 12.1%.
Cettire
Overview: Cettire Limited operates an online luxury goods retailing business in Australia, the United States, and internationally, with a market cap of A$582.35 million.
Operations: Sure, here is the summary sentence for the revenue segments: The company generated A$742.26 million from online retail sales.
Estimated Discount To Fair Value: 48.2%
Cettire (A$1.54) is trading significantly below its estimated fair value of A$2.97, indicating it may be undervalued based on discounted cash flow analysis. Despite a volatile share price and declining profit margins, the company's earnings are forecast to grow 29% annually, outpacing the Australian market's growth rate of 12.1%. Recent financial guidance for Q1 FY2025 projects healthy revenue growth, with sales tracking 20% higher year-on-year through July and August 2024.