The UK stock market has recently faced challenges, with the FTSE 100 index experiencing declines due to weak trade data from China and broader global economic concerns. As investors navigate these uncertain conditions, identifying stocks that are trading below their intrinsic value can present potential opportunities for those seeking to capitalize on mispriced assets.

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

Click here to see the full list of 60 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

Let's take a closer look at a couple of our picks from the screened companies.

AstraZeneca

Overview: AstraZeneca PLC is a biopharmaceutical company engaged in the discovery, development, manufacture, and commercialization of prescription medicines, with a market cap of approximately ￡185.20 billion.

Operations: AstraZeneca's revenue segment is primarily derived from its biopharmaceuticals division, which generated $49.13 billion.

Estimated Discount To Fair Value: 49.6%

AstraZeneca is trading at ￡119.46, significantly below its estimated fair value of ￡237.15, suggesting potential undervaluation based on discounted cash flow analysis. Despite high debt levels and moderate earnings growth forecasts of 16.5% annually, the stock's price reflects a substantial discount to intrinsic value. Recent strategic alliances and clinical advancements in oncology indicate robust operational momentum, potentially enhancing future cash flows despite current financial constraints.

• Insights from our recent growth report point to a promising forecast for AstraZeneca's business outlook.

• Get an in-depth perspective on AstraZeneca's balance sheet by reading our health report here.

Gulf Keystone Petroleum

Overview: Gulf Keystone Petroleum Limited is involved in the exploration, development, and production of oil and gas in the Kurdistan Region of Iraq with a market cap of ￡256.79 million.

Operations: The company's revenue is primarily derived from its exploration and production activities in oil and gas, amounting to $115.15 million.

Estimated Discount To Fair Value: 42.5%

Gulf Keystone Petroleum is trading at ￡1.18, well below its estimated fair value of ￡2.06, indicating significant undervaluation based on discounted cash flow analysis. The company is forecast to become profitable within three years, with revenue growth expected to outpace the UK market substantially at 42.8% per year. Recent board changes include appointing two experienced Non-Executive Directors, potentially strengthening governance and strategic oversight amid ongoing share buybacks and improving earnings performance.