UK's Best Value Stock Picks For August 2024
In This Article:
The UK stock market has recently faced challenges, with the FTSE 100 index closing lower due to weak trade data from China and declining commodity prices impacting major companies. Despite these headwinds, identifying undervalued stocks can offer investors opportunities for potential growth in a fluctuating market.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Gaming Realms (AIM:GMR) | ￡0.40 | ￡0.78 | 48.4% |
| Tracsis (AIM:TRCS) | ￡6.30 | ￡11.44 | 44.9% |
| AstraZeneca (LSE:AZN) | ￡125.12 | ￡245.52 | 49% |
| Mercia Asset Management (AIM:MERC) | ￡0.348 | ￡0.67 | 48.1% |
| NCC Group (LSE:NCC) | ￡1.45 | ￡2.72 | 46.7% |
| Informa (LSE:INF) | ￡8.572 | ￡17.07 | 49.8% |
| Ricardo (LSE:RCDO) | ￡5.20 | ￡10.20 | 49% |
| Franchise Brands (AIM:FRAN) | ￡1.815 | ￡3.60 | 49.6% |
| Tortilla Mexican Grill (AIM:MEX) | ￡0.54 | ￡1.01 | 46.4% |
| Nexxen International (AIM:NEXN) | ￡2.725 | ￡5.33 | 48.9% |
Let's dive into some prime choices out of the screener.
Franchise Brands
Overview: Franchise Brands plc, with a market cap of ￡348.88 million, operates in franchising and related activities across the United Kingdom, North America, and Europe through its subsidiaries.
Operations: The company's revenue segments include Azura (￡0.75M), Pirtek (￡41.95M), B2C Division (￡6.11M), Water & Waste (￡48.88M), and Filta International (￡27.12M).
Estimated Discount To Fair Value: 49.6%
Franchise Brands plc is trading at ￡1.82, significantly below its estimated fair value of ￡3.60, indicating it may be undervalued based on discounted cash flows. Despite a revenue increase to ￡121.27 million from ￡69.84 million, net income dropped to ￡3.04 million from ￡8.13 million due to lower profit margins and large one-off items impacting results. Earnings are forecasted to grow 40% annually, outpacing the UK market's growth rate of 13%.
Trainline
Overview: Trainline Plc operates an independent rail and coach travel platform selling tickets in the United Kingdom and internationally, with a market cap of ￡1.49 billion.
Operations: Trainline's revenue segments include Trainline Solutions (￡134.76 million), International Consumer (￡53.16 million), and United Kingdom Consumer (￡208.80 million).
Estimated Discount To Fair Value: 29.5%
Trainline is trading at ￡3.33, significantly below its estimated fair value of ￡4.72, suggesting it may be undervalued based on discounted cash flows. The company reported a revenue increase to ￡396.72 million and net income of ￡33.99 million for the fiscal year ended February 29, 2024. Earnings grew by 60% over the past year and are forecasted to grow at an annual rate of 21.9%, outpacing the UK market's growth rate of 13%.