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3 US Stocks Estimated To Be Undervalued In January 2025

Simply Wall St·01/24/2025 14:02:25
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As the U.S. equities market takes a pause from its recent rally, with major indexes like the Dow Jones and S&P 500 hovering near record highs, investors are keenly observing opportunities in undervalued stocks. In this environment of optimism around strong corporate earnings and AI-driven growth prospects, identifying stocks that are priced below their intrinsic value can offer potential for long-term gains amidst fluctuating market conditions.

Top 10 Undervalued Stocks Based On Cash Flows In The United States

Name Current Price Fair Value (Est) Discount (Est)
Heartland Financial USA (NasdaqGS:HTLF) $66.30 $129.89 49%
Afya (NasdaqGS:AFYA) $15.84 $30.77 48.5%
Camden National (NasdaqGS:CAC) $43.43 $83.71 48.1%
Array Technologies (NasdaqGM:ARRY) $6.97 $13.85 49.7%
Privia Health Group (NasdaqGS:PRVA) $22.93 $44.59 48.6%
Verra Mobility (NasdaqCM:VRRM) $26.46 $52.13 49.2%
BeiGene (NasdaqGS:ONC) $222.24 $435.57 49%
Equifax (NYSE:EFX) $268.88 $535.98 49.8%
Tenable Holdings (NasdaqGS:TENB) $43.86 $86.64 49.4%
RXO (NYSE:RXO) $26.19 $52.36 50%

Click here to see the full list of 163 stocks from our Undervalued US Stocks Based On Cash Flows screener.

Let's explore several standout options from the results in the screener.

Datadog (NasdaqGS:DDOG)

Overview: Datadog, Inc. operates an observability and security platform for cloud applications both in North America and internationally, with a market cap of approximately $47.60 billion.

Operations: The company's revenue segment includes IT Infrastructure, generating $2.54 billion.

Estimated Discount To Fair Value: 43.2%

Datadog, Inc. appears undervalued based on cash flow analysis, trading at US$140.2 while its estimated fair value is US$246.63, a significant discrepancy of over 20%. The company has recently completed a convertible bond offering worth $870 million and announced innovative product enhancements like Cloud SIEM and Database Monitoring for MongoDB, potentially boosting operational efficiency and future cash flows despite recent insider selling activity.

NasdaqGS:DDOG Discounted Cash Flow as at Jan 2025
NasdaqGS:DDOG Discounted Cash Flow as at Jan 2025

TAL Education Group (NYSE:TAL)

Overview: TAL Education Group offers K-12 after-school tutoring services in the People's Republic of China and has a market cap of approximately $5.53 billion.

Operations: TAL Education Group's revenue segments are not specified in the provided text.

Estimated Discount To Fair Value: 42.4%

TAL Education Group is trading at US$11.07, significantly below its estimated fair value of US$19.22, indicating substantial undervaluation based on cash flows. Recent earnings reports show a turnaround with net income reaching US$23.07 million in Q3 2024 from a loss the previous year, and strong revenue growth forecasted at 20.7% annually, outpacing the broader U.S. market's growth rate of 9.1%.

NYSE:TAL Discounted Cash Flow as at Jan 2025
NYSE:TAL Discounted Cash Flow as at Jan 2025

TKO Group Holdings (NYSE:TKO)

Overview: TKO Group Holdings, Inc. is a sports and entertainment company with a market cap of $24.42 billion.

Operations: The company generates revenue from its two main segments: UFC with $1.35 billion and WWE with $1.43 billion.

Estimated Discount To Fair Value: 11.5%

TKO Group Holdings is trading at US$151.97, slightly below its estimated fair value of US$171.73, suggesting a modest undervaluation based on cash flows. The company forecasts revenue growth of 14% annually, surpassing the U.S. market's 9%. Despite recent net losses, earnings are expected to grow significantly by 88.85% annually over the next three years. Recent initiatives include a share repurchase program worth up to $2 billion and a new quarterly dividend program starting March 2025.

NYSE:TKO Discounted Cash Flow as at Jan 2025
NYSE:TKO Discounted Cash Flow as at Jan 2025

Where To Now?

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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.

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