ASX shares expected to trade below their intrinsic value in June 2024
With the Australian market posting modest gains, with the ASX200 closing this week up 0.1%, investors’ focus may shift to sectors that have underperformed and outperformed, such as materials and IT. In such a mixed economic environment, identifying potentially undervalued stocks becomes crucial, especially when considering long-term growth prospects in volatile markets.
The 10 most undervalued stocks in Australia based on cash flows
Surname |
Current price |
Fair value (estimated) |
Discount (estimated) |
Charter Hall Group (ASX:CHC) |
11,18 € |
22,20 € |
49.6% |
COSOL (ASX:COS) |
1,255 € |
2,43 € |
48.3% |
Number (ASX:CUP) |
0,57 € |
1.10 A$ |
48.3% |
ReadyTech Holdings (ASX:RDY) |
3,25 € |
5,91 € |
45% |
hipages Group Holdings (ASX:HPG) |
1,03 € |
1,94 € |
47% |
Regal Partners (ASX:RPL) |
3,21 € |
6,18 € |
48% |
IPH (ASX:IPH) |
6,27 € |
11,37 € |
44.9% |
Millennium Services Group (ASX:MIL) |
1,145 € |
2,24 € |
48.9% |
SiteMinder (ASX:SDR) |
5,09 € |
9,04 € |
43.7% |
Coast Entertainment Holdings (ASX:CEH) |
0,46 € |
0.84 A$ |
45.1% |
Click here to see the full list of 47 stocks from our Undervalued ASX Stocks Based on Cash Flows screener.
Let’s discover some pearls from our specialized screener
Overview: Mineral Resources Limited is an Australian, Asian and international mining services company with a market capitalisation of approximately A$10.52 billion.
Operations: The company generates revenues from lithium (AUD 1.60 billion), iron ore (AUD 2.50 billion) and mining services (AUD 2.82 billion).
Estimated discount to fair value: 19%
Mineral Resources Limited currently trades at A$53.92, 19% below our calculated fair value of A$66.53. This discrepancy suggests the stock may be undervalued based on discounted cash flows. The company’s earnings are expected to grow 27.42% annually, beating the Australian market forecast of 13.8%. Despite this growth potential and a forecast high return on equity of 25.8%, there are concerns as profit margins have fallen to 7.9% from 16.3% last year and interest payments are not adequately covered by earnings.
Overview: Strike Energy Limited is an Australian company engaged in the exploration and development of oil and gas reserves and has a market capitalization of approximately A$801.02 million.
Operations: The company focuses primarily on the exploration and development of oil and gas deposits in Australia.
Estimated discount to fair value: 29.9%
Strike Energy appears to be undervalued by over 20% at a current price of A$0.28 based on discounted cash flow analysis, suggesting potential for investors looking for value based on financial metrics. The company’s revenues and earnings are expected to grow by 37.8% and 36.69% per year, respectively, comfortably outperforming the Australian market averages of 5.4% and 13.8% respectively. However, recent significant insider selling and shareholder dilution over the past year may warrant investor caution.
Overview: Viva Energy Group Limited is an energy company operating in Australia, Singapore and Papua New Guinea with a market capitalisation of approximately A$5.00 billion.
Operations: The company generates revenue in three main segments: Comfort and Mobility with AUD 10.10 billion, Commercial and Industrial with AUD 16.64 billion, and Energy and Infrastructure with AUD 7.32 billion.
Estimated discount to fair value: 17.1%
Viva Energy Group is undervalued by 17.1% at A$3.15, with fair value estimated at A$3.8 based on discounted cash flow analysis. Despite recent index changes and insufficient coverage by earnings or cash flow, the dividend yields 4.51%. Outperforming is expected with earnings growth forecast at 29.76% annually, in contrast to slower revenue growth forecasts of 3.2% per year versus the market’s 5.4%.
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This Simply Wall St article is of a general nature. We provide commentary based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks, and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
Companies discussed in this article include ASX:MINASX:STX ASX:VEA and
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