Three ASX Stocks Estimated To Be Trading With Intrinsic Discounts Ranging From 11.5% To 48.5%
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Despite a relatively flat performance in the past week, the Australian market has seen a growth of 7.2% over the past year, with earnings expected to grow by 13% per annum. In this context, identifying stocks that are trading below their intrinsic value could offer potential opportunities for investors looking for growth in a steadily advancing market.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| MaxiPARTS (ASX:MXI) | A$2.04 | A$3.94 | 48.2% |
| GTN (ASX:GTN) | A$0.445 | A$0.85 | 47.4% |
| Elders (ASX:ELD) | A$8.39 | A$16.28 | 48.5% |
| VEEM (ASX:VEE) | A$1.70 | A$3.51 | 51.6% |
| IPH (ASX:IPH) | A$6.25 | A$12.00 | 47.9% |
| ReadyTech Holdings (ASX:RDY) | A$3.26 | A$6.26 | 47.9% |
| Australian Clinical Labs (ASX:ACL) | A$2.52 | A$4.74 | 46.9% |
| Core Lithium (ASX:CXO) | A$0.091 | A$0.17 | 45.9% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| SiteMinder (ASX:SDR) | A$5.20 | A$10.02 | 48.1% |
We're going to check out a few of the best picks from our screener tool
Elders
Overview: Elders Limited operates primarily in Australia, offering agricultural products and services to rural and regional customers, with a market capitalization of approximately A$1.33 billion.
Operations: The company generates revenue through three main segments: Branch Network (A$2.54 billion), Wholesale Products (A$341.19 million), and Feed and Processing Services (A$120.14 million).
Estimated Discount To Fair Value: 48.5%
Elders Limited, currently trading at A$8.39, appears undervalued by more than 20%, with a calculated fair value of A$16.28 based on discounted cash flows. Despite a challenging year with net profit margins dropping from 3.4% to 2.1% and a significant earnings decline in the first half of 2024, Elders is forecasted to grow earnings by 22.8% annually over the next three years. However, its high level of debt and dividends not well covered by earnings pose risks that temper its attractiveness as an undervalued stock based on cash flows.
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The growth report we've compiled suggests that Elders' future prospects could be on the up.
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Navigate through the intricacies of Elders with our comprehensive financial health report here.
South32
Overview: South32 Limited is a diversified metals and mining company with operations across multiple countries including Australia, India, and the United States, and has a market capitalization of approximately A$17.37 billion.
Operations: South32's revenue is derived from various segments including Cannington with $588 million, Cerro Matoso at $541 million, Sierra Gorda generating $649 million, Brazil Alumina contributing $443 million, Mozal Aluminium at $801 million, Worsley Alumina with $1.36 billion, Hillside Aluminium producing $1.72 billion, Australia Manganese at $651 million, Brazil Aluminium (BA) contributing $210 million, South Africa Manganese with $321 million, and Illawarra Metallurgical Coal generating $1.36 billion.