Yahoo Finance Cadence Design Systems And 2 Other Stocks That Might Be Trading Below Intrinsic Value
In a week marked by mixed returns and notable fluctuations in major indices, the global market has shown varied signals about the U.S. economy and investor sentiment. Amid this backdrop, identifying undervalued stocks can be a prudent strategy for investors seeking to capitalize on potential market inefficiencies. A good stock, particularly in current conditions, is one that may be trading below its intrinsic value due to temporary factors or broader market trends rather than fundamental weaknesses. This article will explore three such stocks that might present compelling opportunities for discerning investors: Cadence Design Systems and two other promising candidates.
Top 10 Undervalued Stocks Based On Cash Flows
Name | Current Price | Fair Value (Est) | Discount (Est) |
Aoyama Zaisan Networks CompanyLimited (TSE:8929) | ¥1399.00 | ¥2796.46 | 50% |
B2 Impact (OB:B2I) | NOK8.57 | NOK17.05 | 49.7% |
Engro Fertilizers (KASE:EFERT) | PKR167.03 | PKR333.33 | 49.9% |
Fudo Tetra (TSE:1813) | ¥2213.00 | ¥4407.38 | 49.8% |
Informa (LSE:INF) | £8.572 | £17.07 | 49.8% |
Grifols (BME:GRF) | €9.07 | €18.14 | 50% |
Sonos (NasdaqGS:SONO) | US$13.09 | US$26.16 | 50% |
BILL Holdings (NYSE:BILL) | US$48.14 | US$96.09 | 49.9% |
SK Biopharmaceuticals (KOSE:A326030) | ₩85600.00 | ₩170336.89 | 49.7% |
INTERSHOP Communications (XTRA:ISHA) | €2.02 | €4.04 | 50% |
Let's review some notable picks from our screened stocks.
Cadence Design Systems
Overview: Cadence Design Systems, Inc. offers software, hardware, services, and reusable integrated circuit (IC) design blocks globally and has a market cap of $73.29 billion.
Operations: Cadence Design Systems generates revenue primarily from its CAD/CAM software segment, which accounted for $4.16 billion.
Estimated Discount To Fair Value: 17.6%
Cadence Design Systems appears undervalued based on cash flows, trading at US$260.81, below the estimated fair value of US$316.53. The company has demonstrated consistent revenue and profit growth, with earnings increasing 7.5% annually over the past five years and forecasted to grow 18.49% per year, surpassing market expectations. Recent buybacks totaling US$3.58 billion and robust earnings guidance for 2024 further support its valuation potential amidst ongoing strategic partnerships and product innovations like the Cadence Janus Network-on-Chip (NoC).
Clearwater Analytics Holdings
Overview: Clearwater Analytics Holdings, Inc. (NYSE:CWAN) offers a SaaS solution for automated investment data services to various financial entities globally and has a market cap of approximately $4.81 billion.
Operations: Clearwater Analytics Holdings generates revenue by providing a SaaS platform for automated investment data aggregation, reconciliation, accounting, and reporting services to insurers, investment managers, corporations, institutional investors, and government entities worldwide.
Estimated Discount To Fair Value: 38.2%
Clearwater Analytics Holdings is trading at US$23.52, significantly below its estimated fair value of US$38.06, indicating it may be undervalued based on cash flows. The company has reported strong revenue growth, with sales reaching US$106.79 million in Q2 2024 and net income turning positive over the past six months. Earnings are forecast to grow 79.73% annually, and Clearwater is expected to become profitable within three years, driven by innovative product launches like the CP Issuance tool and strategic client acquisitions such as Franklin Templeton and Pool Re.
GFL Environmental
Overview: GFL Environmental Inc. provides non-hazardous solid waste management and environmental services in Canada and the United States, with a market cap of CA$20.17 billion.
Operations: The company's revenue segments include non-hazardous solid waste management and environmental services across Canada and the United States.
Estimated Discount To Fair Value: 33.6%
GFL Environmental is trading at CA$55.6, well below its estimated fair value of CA$83.7, making it undervalued based on cash flows. Recent debt financing has reduced borrowing costs and extended maturities, enhancing financial flexibility. Despite activist pressure to sell its environmental solutions business, GFL's revenue is forecast to grow 7.4% annually, outpacing the Canadian market slightly. Earnings are expected to surge 144% per year over the next three years as profitability improves.
Seize The Opportunity
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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 NasdaqGS:CDNS NYSE:CWAN and TSX:GFL.
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