Examining Three UK Stocks That May Be Undervalued In July 2024

In This Article:

As the United Kingdom braces for upcoming elections and financial markets exhibit cautious optimism, investors are closely monitoring shifts in the FTSE 100 and broader economic indicators. In such a climate, identifying stocks that may be undervalued becomes particularly compelling, as these could present opportunities for those looking to invest in potential growth amidst prevailing uncertainties.

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

Name

Current Price

Fair Value (Est)

Discount (Est)

TBC Bank Group (LSE:TBCG)

£25.70

£48.56

47.1%

Gaming Realms (AIM:GMR)

£0.363

£0.68

46.9%

LSL Property Services (LSE:LSL)

£3.33

£6.47

48.6%

WPP (LSE:WPP)

£7.244

£13.96

48.1%

BATM Advanced Communications (LSE:BVC)

£0.17

£0.33

48.4%

Mercia Asset Management (AIM:MERC)

£0.305

£0.58

47.7%

Ricardo (LSE:RCDO)

£4.87

£9.51

48.8%

Entain (LSE:ENT)

£6.30

£12.19

48.3%

Accsys Technologies (AIM:AXS)

£0.55

£1.05

47.7%

Tortilla Mexican Grill (AIM:MEX)

£0.60

£1.11

46.1%

Click here to see the full list of 58 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

Let's explore several standout options from the results in the screener

Forterra

Overview: Forterra plc specializes in manufacturing and selling building products in the United Kingdom, with a market capitalization of approximately £328.97 million.

Operations: The company generates revenue primarily through two segments: Bespoke Products (£72.70 million) and Bricks and Blocks (£277.40 million).

Estimated Discount To Fair Value: 41.7%

Forterra, trading at £1.59, significantly below its fair value estimate of £2.73, appears undervalued based on discounted cash flows. Despite a recent dividend cut to 2 pence per share and a 6% revenue drop over four months ending April 2024, Forterra's earnings are expected to grow significantly at a rate of 26.18% annually over the next three years. However, its debt is poorly covered by operating cash flow and profit margins have declined from last year's levels.

LSE:FORT Discounted Cash Flow as at Jul 2024
LSE:FORT Discounted Cash Flow as at Jul 2024

Halfords Group

Overview: Halfords Group plc operates in the UK and the Republic of Ireland, offering a range of motoring and cycling products and services, with a market capitalization of approximately £306.01 million.

Operations: The company generates revenue primarily through two segments: Retail, which brings in £997.10 million, and Autocentres, contributing £699.40 million.

Estimated Discount To Fair Value: 45.8%