AstraZeneca Stock And 2 Cash Flow Picks Trading Below Fair Value

Global bond yields are reacting to every hint of changing inflation, which puts reliable cash generation back in the spotlight. When rates shift, investors often reassess what they are willing to pay for future cash flows. That can leave some solid businesses trading below their estimated fair value. This article highlights three stocks from the Undervalued Stocks Based On Cash Flows screener that stand out on this theme.

The three stocks below are only a sample, and the full screen surfaced 43 more companies with equally compelling cash flow stories that this article does not cover. To identify and analyze opportunities that best match your own criteria, head straight to the Undervalued Stocks Based On Cash Flows screener.

AstraZeneca (LSE:AZN)

Overview: AstraZeneca is a global biopharmaceutical company based in Cambridge that discovers, develops, manufactures, and sells prescription medicines across oncology, cardiovascular, renal and metabolism, respiratory, vaccines and immune therapies, and rare diseases.

Operations: AstraZeneca generates about $61.4b in revenue from pharmaceuticals.

Market Cap: £181.5b

AstraZeneca combines a broad portfolio of cancer and specialty drugs with a late stage pipeline that continues to produce fresh approvals in areas such as HER2+ tumors and breast cancer, which supports its earnings growth profile. The stock also appears undervalued on cash flows, with a P/E below many peers, a 20.8% ROE, and a 17% net margin. At the same time, investors need to weigh factors such as dependence on a handful of blockbuster drugs, high R&D and debt levels, and growing pressure from price controls and biosimilar competition. With analysts currently modeling upside and recent regulatory wins, AstraZeneca is a company that many investors may want to examine more closely.

AstraZeneca’s earnings profile, P/E and 20.8% ROE suggest that the headline story may not fully reflect the cash flow story. Get the full context in the 4 key rewards and 2 important warning signs

Build your own cash flow shortlist around AstraZeneca

AstraZeneca and the two other stocks in this list all came from a single screener, but the real value for you is in shaping your own filters. Use our customisable Screener to mix metrics like valuation, cash flows, balance sheet strength and risks, or tap into our curated Investing Ideas for ready made shortlists.

Foresight Group Holdings (LSE:FSG)

Overview: Foresight Group Holdings is a London based asset manager that runs infrastructure, private equity, venture capital and listed funds, with a strong tilt toward renewable energy, energy transition projects and other real assets across the UK, Europe and Australia. It raises capital from both institutional and retail investors and prefers growth capital and buyout deals, often taking majority stakes in smaller companies.

Operations: Foresight Group Holdings generates about £114.8 million from Real Assets and £50.1 million from Private Equity, with most revenue coming from the United Kingdom and Australia.

Market Cap: £551.2 million

Foresight Group Holdings sits at the crossroads of real assets, decarbonisation and private markets, which helps explain why earnings grew 34.4% last year and net margins are around 27.7%. Analysts see double digit growth in both revenue and earnings, and our cash flow model suggests the stock trades at a discount to estimated fair value, even with a P/E close to the industry average. At the same time, you need to weigh funding that relies entirely on external borrowing, exposure to UK and European policy shifts on renewables, and the ups and downs of performance fees. The full story on its AUM ambitions, buybacks and fee mix is where things get interesting for long term cash flow investors.

Foresight Group Holdings is positioned within accelerating real assets and decarbonisation themes, yet its valuation story is easy to overlook. Get the full picture in the analysis report for Foresight Group Holdings

Accsys Technologies (AIM:AXS)

Overview: Accsys Technologies produces high performance acetylated wood products used in windows, doors, decking and cladding. It offers longer lasting alternatives to traditional timber under its Accoya and Tricoya brands for customers around the world.

Operations: Accsys Technologies currently generates about €153 million in revenue, all from its Accoya segment, with sales spread across the UK and Ireland, the rest of Europe, the Americas and other regions.

Market Cap: £173 million

Accsys Technologies sits at the crossroads of premium building materials and low carbon construction, with its acetylated Accoya wood now supporting a €153 million revenue base and a recent shift into profitability. Analyst expectations of earnings growth above 30% a year and a target price that is higher than the current share price reflect confidence in scaling its Kingsport plant and extracting more value from higher margin products like Accoya Color. At the same time, heavy reliance on external borrowing and the need to ramp existing plants without large new capital expenditure leave limited room for operational setbacks. For investors who focus on cash flow and sustainability, the balance between growth potential and funding risk is a key consideration.

Accsys Technologies sits at the crossroads of premium materials and low carbon construction. Yet the real story may be how growth, funding and cash generation fit together. See how the analysis report for Accsys Technologies could shift your view

Seeking Alternatives Before The Crowd?

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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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