The Australian stock market has shown mixed performance recently, with the ASX200 closing up 0.1% at 8,212 points. Gains in the Materials sector have been driven by higher iron ore prices following China's latest stimulus announcement, while sectors like Health Care and Utilities have seen declines. In this fluctuating market environment, identifying undervalued stocks can be a prudent strategy for investors looking to capitalize on potential growth opportunities. Here are three ASX stocks estimated to be undervalued in September 2024.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Click here to see the full list of 44 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Let's review some notable picks from our screened stocks.

Infomedia

Overview: Infomedia Ltd (ASX:IFM) is a technology company that develops and supplies electronic parts catalogues, service quoting software, and e-commerce solutions for the automotive industry worldwide, with a market cap of A$595.87 million.

Operations: Revenue from Publishing - Periodicals amounted to A$140.83 million.

Estimated Discount To Fair Value: 34.5%

Infomedia Ltd reported strong financial results for the year ended June 30, 2024, with sales increasing to A$140.83 million and net income rising to A$12.68 million. The stock is currently trading at A$1.59, which is significantly below its estimated fair value of A$2.43 based on discounted cash flow analysis. Earnings are forecasted to grow at an annual rate of 22%, outpacing the broader Australian market's expected growth rate of 12.2%.

• Our growth report here indicates Infomedia may be poised for an improving outlook.
• Unlock comprehensive insights into our analysis of Infomedia stock in this financial health report.

Megaport

Overview: Megaport Limited (ASX:MP1) offers on-demand interconnection and internet exchange services to enterprises and service providers across Australia, New Zealand, Hong Kong, Singapore, Japan, North America, and Europe with a market cap of A$1.20 billion.

Operations: Revenue Segments (in millions of A$): Europe: 31.88, Asia-Pacific: 52.58, North America: 110.81

Estimated Discount To Fair Value: 44.4%

Megaport Limited, trading at A$7.50, is significantly undervalued with an estimated fair value of A$13.48 based on discounted cash flow analysis. The company reported a net income of A$9.61 million for the year ending June 30, 2024, reversing a prior year's loss. Earnings are expected to grow annually by 32.52%, outpacing the Australian market's forecasted growth rate of 12.2%. Recent strategic partnerships and expanded cloud connectivity solutions further bolster its growth prospects.

• The analysis detailed in our Megaport growth report hints at robust future financial performance.
• Dive into the specifics of Megaport here with our thorough financial health report.

Nanosonics

Overview: Nanosonics Limited, with a market cap of A$1.13 billion, operates as a global infection prevention company.

Operations: Nanosonics generates revenue primarily from its Healthcare Equipment segment, amounting to A$170.01 million.

Estimated Discount To Fair Value: 26.6%

Nanosonics, trading at A$3.73, is significantly undervalued with an estimated fair value of A$5.08 based on discounted cash flow analysis. Despite being dropped from the S&P/ASX 200 Index, its revenue is forecast to grow 8.7% annually, outpacing the Australian market's 5.5%. Earnings are expected to grow significantly at 23.2% per year over the next three years despite a drop in net income to A$12.97 million from A$19.88 million last year and lower profit margins (7.6%).

• Our comprehensive growth report raises the possibility that Nanosonics is poised for substantial financial growth.
• Click here and access our complete balance sheet health report to understand the dynamics of Nanosonics.

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 ASX:IFM ASX:MP1 and ASX:NAN.

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