3 UK Stocks That Investors Might Be Undervaluing
In recent times, the UK market has faced challenges, with the FTSE 100 index experiencing fluctuations due to weak trade data from China and broader global economic concerns. As investors navigate these uncertain conditions, identifying undervalued stocks could present opportunities for those seeking value in a volatile market environment.
Name
Current Price
Fair Value (Est)
Discount (Est)
Begbies Traynor Group (AIM:BEG)
£0.922
£1.70
45.9%
Hercules Site Services (AIM:HERC)
£0.495
£0.93
46.5%
Fevertree Drinks (AIM:FEVR)
£6.58
£13.12
49.9%
Gaming Realms (AIM:GMR)
£0.376
£0.71
47.3%
On the Beach Group (LSE:OTB)
£2.585
£4.98
48.1%
Duke Capital (AIM:DUKE)
£0.29
£0.58
49.8%
Deliveroo (LSE:ROO)
£1.32
£2.61
49.5%
Informa (LSE:INF)
£8.46
£16.35
48.2%
St. James's Place (LSE:STJ)
£9.29
£18.50
49.8%
BATM Advanced Communications (LSE:BVC)
£0.1915
£0.38
49.5%
Click here to see the full list of 50 stocks from our Undervalued UK Stocks Based On Cash Flows screener.
Let's explore several standout options from the results in the screener.
Overview: Hargreaves Services Plc offers environmental and industrial services across the United Kingdom, Europe, Hong Kong, and internationally with a market cap of £204.36 million.
Operations: The company's revenue segments include £206.86 million from Services and £7.04 million from Hargreaves Land.
Estimated Discount To Fair Value: 45.9%
Hargreaves Services is significantly undervalued, trading at £6.20 against an estimated fair value of £11.45, suggesting strong potential based on discounted cash flow analysis. Despite a low return on equity forecast and profit margins declining to 5.8% from last year's 13.2%, earnings are expected to grow significantly by 25% annually over the next three years, outpacing the UK market's growth rate. Recent executive changes aim to enhance value creation within its services unit.
Our expertly prepared growth report on Hargreaves Services implies its future financial outlook may be stronger than recent results.
Dive into the specifics of Hargreaves Services here with our thorough financial health report.
Overview: Coats Group plc, along with its subsidiaries, manufactures and supplies industrial sewing threads globally, with a market cap of approximately £1.50 billion.
Operations: The company's revenue segments include Apparel at $731 million, Footwear at $381.90 million, and Performance Materials at $327 million.
Estimated Discount To Fair Value: 43%
Coats Group is trading at £0.94, below its estimated fair value of £1.65, highlighting potential undervaluation based on cash flow analysis. Earnings grew by 46.8% last year and are forecast to increase by 15.4% annually, surpassing the UK market's growth rate of 14.7%. However, the company faces challenges with high debt levels and an unstable dividend track record. Recent executive changes include a new CFO appointment aimed at strengthening financial management.
Insights from our recent growth report point to a promising forecast for Coats Group's business outlook.
Take a closer look at Coats Group's balance sheet health here in our report.
Overview: Savills plc, along with its subsidiaries, provides real estate services across the United Kingdom, Continental Europe, Asia Pacific, Africa, North America, and the Middle East with a market cap of £1.41 billion.
Operations: The company's revenue segments include Consultancy (£464.80 million), Transaction Advisory (£803.60 million), Investment Management (£100.50 million), and Property and Facilities Management (£920.90 million).
Estimated Discount To Fair Value: 20%
Savills is trading at £10.42, below its estimated fair value of £13.02, suggesting undervaluation based on cash flows. Despite a decline in profit margins from 3.8% to 1.9%, earnings are expected to grow significantly at 32.7% annually, outpacing the UK market average of 14.7%. However, challenges include an unstable dividend track record and low forecasted return on equity (14%). Recent developments involve marketing a €60 million Dublin office asset amidst WeWork's financial restructuring.
The analysis detailed in our Savills growth report hints at robust future financial performance.
Click here to discover the nuances of Savills with our detailed financial health report.
Reveal the 50 hidden gems among our Undervalued UK Stocks Based On Cash Flows screener with a single click here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AIM:HSP LSE:COA and LSE:SVS.
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The yield on two-year gilts – which impacts the cost of servicing the national debt in the shorter term – dropped nine basis points to a one-month low of 3.9pc. Chinese officials have been pictured leaving Lancaster House in London following trade talks with the US. The negotiations have been suspended for lunch, according to Bloomberg. The dollar was steady as talks between Beijing and Washington continued for a second day. The dollar index, which measures the US currency against six others, was less than 0.1pc higher at 98.989, and remained close to a six-week low of 98.351 it touched last week. However, the pound was down sharply against the dollar after unemployment hit a new four-year high, raising concerns about the jobs market. Danske Bank analyst Kirstine Kundby-Nielsen said the labour market data 'was definitely on the weak side'. 'This puts a question mark on the hawkish bias that we've seen from the Bank of England.' 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US commerce secretary Howard Lutnick and his Chinese counterpart Wang Wentao have arrived at Lancaster House in London for the second day of their talks aimed at easing trading relations between the world's two largest economies. Donald Trump's top trade official said the US-China talks were 'going well' and were expected to last all day. US commerce secretary Howard Lutnick spoke as the negotiations at Lancaster House in London got under way for a second day. The first round of talks on Monday lasted around seven hours. The value of the pound has come under pressure amid the prospect of a US-China trade deal as official figures showed a weakening in the UK jobs market. Sterling slipped 0.5pc against the dollar below $1.35 amid after warm words from President Trump and his delegation raised hopes for a deal. An improvement in trade tensions could boost the dollar, which has slumped more than 7pc against the pound so far this year. Sterling was also hit by official figures showing unemployment hit its highest level in nearly four years. Wage growth also slowed by more than expected in April, according to the Office for National Statistics, prompting traders to ramp up bets on interest rate cuts. Money markets indicate there is now an 81pc chance of a reduction in borrowing costs in August, compared to 68pc before the latest ONS figures. Jordan Rochester of Mizuho said the Bank of England would be free to cut interest rates at a faster pace from 4.25pc now to 3.5pc by November. Matthew Ryan of Ebury added: 'We think that a summer cut is back in play, with a good chance we now see a couple more rate reductions before the year is out.' China's struggling stock markets will not see a huge turnaround this year even if trade talks with the US in London are a success, economists have said. The Hang Seng and China's equity markets were hit hard after Donald Trump unleashed his 'liberation day' tariffs, although both are now above their levels on April 2. However, Thomas Mathews of Capital Economics said he 'wouldn't bank on a big turnaround thanks to any potential trade breakthroughs'. He said: 'Despite their recent performance, the tariff shock to China's equities hasn't actually been especially large, with other factors such as domestic policy more important. 'And, we doubt that the US will back off completely. That's likely to restrain any relief rally. 'Even if there isn't a broader rally, though, it's possible that any easing of access to high-end semiconductors – apparently up for debate – could give China's 'tech' stocks a boost. 'But we wouldn't expect too much there, either. It's true that the 2018 trade war seems to have been the catalyst for a fall in their valuations relative to their global peers. 'But, by far the bigger plunge happened during the subsequent 'crackdowns' by China's authorities, beginning around late-2020.' Officials from both Washington and Beijing are expected to issue updates later after the US-China trade talks resume at 10am UK time. The two sides met for nearly seven hours on Monday at Lancaster House in London. The US delegation featured treasury secretary Scott Bessent, commerce secretary Howard Lutnick and trade representative Jamieson Greer. The Chinese contingent was helmed by vice premier He Lifeng. The FTSE 100 has been powered close to record highs by a surge in defence stocks as Donald Trump resets the global world order. Defense contractors Babcock and BAE Systems are among the biggest gainers on the index this year, as well as precious metals miner Fresnillo. It follows pressure from Donald Trump for European nations to increase their defence spending, while a surge in gold prices has boosted miners. However, the index remains 0.4pc below its record intra-day high of 8,908.82 and its latest jump comes a day after a series of high-profile takeovers of companies on the London markets. Georges Debbas of BNP Paribas said: 'UK stocks are among the cheapest in Europe. 'The country is also the most friendly to the US, as it's the only one to have a firm trade agreement in place. That allows you to have a more constructive view on the market.' The FTSE 100 is on track to close at a record high today amid renewed hopes about the prospects of trade talks between the US and China. The UK's flagship stock index climbed as much as 0.4pc to 8871,41, which was above the record close it achieved in March. Stock markets plunged around the world following Donald Trump's 'liberation day' tariffs in April but equities have staged a dramatic recovery as the US president walked back on the most-severe of his measures. The S&P 500 on Wall Street remains just 2.3pc short of its record high in February, while the Nasdaq Composite is 2.9pc away from its peak set in December. European stocks were more cautious than those in Britain as investors stayed on edge awaiting fresh signals from the second day of tense US-China trade negotiations. The continent-wide Stoxx 600 was flat at 553, with the Cac 40 in Paris little changed at 7,793.37 and the Dax in Frankfurt edging down 0.2pc to 24,137.25. In London, the FTSE 100 was up 0.4pc and the FTSE 250 gained 0.2pc. The spotlight remains on the talks in London between the world's two biggest economies, as investors eagerly watch for any signs of progress or a thaw in relations. Gains in carmakers, which rose 1pc, were offset by financial services and industrial shares, which fell 0.8pc and 0.4pc, respectively. Among stocks, Novo Nordisk gained nearly 2pc after a report said activist hedge fund Parvus Asset Management is building a stake in the drugmaker. In Britain, Bellway gained 4.3pc after the British homebuilder raised its forecast for full-year volume production. Shares of Aberdeen gained 5.2pc to lead the FTSE 250 after JP Morgan upgraded the fund manager's stock to 'overweight' from 'neutral'. The FTSE 100 opened higher amid optimism there will be a fresh trade truce between the US and China as talks in London enter a second day. The UK's blue-chip stock index rose 0.3pc at the open to 8,862.40 while the mid-cap FTSE 250 gained 0.1pc to 21,310.57. Stock markets in China turned lower as investors worried the trade talks between Washington and Beijing officials did not go well. The Hang Seng in Hong Kong was up as much as 0.5pc in early trading after US officials said the talks had been 'fruitful' and President Trump indicated he had received good reports. However, by the afternoon the index was down as much as 0.8pc, with the Shanghai Composite also turning gains of 0.2pc into losses of as much as 1pc. Meanwhile, gold turned losses of as much as 1pc into a decline of just 0.2pc. 'People seem to be speculating that the talks didn't go well,' said Fu Shifeng, investment director at Cheng Zhou Investment told Bloomberg. 'The rally in gold prices as well as rare-earth stocks seems to suggest that.' Thanks for joining me. Donald Trump warned it was 'not easy' to hold negotiations with China as trade talks in London entered a second day. The US president insisted he was only getting 'good reports' about progress between the teams of officials from Washington and Beijing. 'We are doing well with China. China's not easy,' President Trump told reporters at the White House on Monday. 'I'm only getting good reports.' US treasury secretary Scott Bessent said it had been a 'good meeting' on Monday, while Mr Trump's commerce secretary Howard Lutnick said the negotiations had been 'fruitful'. Stocks rose in Asia overnight, with European markets expected to open higher amid hopes that the negotiations will ease trade tensions between the world's two largest economies. Apple's AI event falls flat as iPhone maker struggles | Investors sent shares downwards as Apple unveiled minor upgrades Thames Water lenders demand reprieve on fines in £17bn rescue deal | Ofwat urged to consider 'regulatory reset' after struggling utility giant hit with record penalty Nervous families freeze spending in blow to growth hopes | Fresh pressure on Rachel Reeves as retail sales rise just 1pc Miliband warned carbon capture project faces collapse without £4bn injection | Fledgling green tech has already received almost £22bn in public subsidies SNP ferry scheme suffers fresh blow after rain causes ship to flood | Glen Rosa is already behind schedule and £100m over budget Asian shares were mixed on Tuesday as investors kept an eye on the China-US trade talks that might help stave off a recession. A second day of talks was planned after US and Chinese officials met in London for negotiations over various issues. The hope is that they can eventually reach a deal to reduce painfully high tariffs against each other. Most of the tariff hikes imposed since Donald Trump escalated his trade war are paused to allow trade in everything from tiny tech gadgets to enormous machinery to continue. In Asian trading, Tokyo's Nikkei 225 gained 0.2pc to 38,177.71, while the Kospi in South Korea jumped 0.3pc to 2,865.24. Hong Kong's Hang Seng fell 0.2pc to 24,127.30 and the Shanghai Composite index was down 0.5pc to 3,384.47. In Taiwan, the Taiex surged 2.1pc to 22,242.14. Australia's S&P/ASX 200 advanced 0.8pc to 8,587.20. On Wall Street, the Dow Jones Industrial Average was flat, at 42,761.76, the S&P 500 rose 0.1pc, to 6,005.88. and the Nasdaq rose 0.3pc, to 19,591.24. In the bond market, the yield on benchmark 10-year US Treasury notes fell to 4.478pc from 4.494pc late on Sunday. 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