Bargain Hunt: UK Stocks Trading at Steep Discounts Amid Market Jitters
London's equity markets are feeling the chill this January. The FTSE 100 and FTSE 250 have come under sustained pressure, largely driven by disappointing trade figures from China, a key global growth engine. In this climate of uncertainty, value-focused investors are scouring the market for quality names that have been unduly punished. A screen for UK stocks trading below their estimated intrinsic value, based on discounted cash flow models, has thrown up several notable candidates.
NIOX Group Plc (AIM:NIOX)
The medical device specialist, which focuses on asthma diagnosis and management, is currently priced at £0.68. This represents a 27.2% discount to its estimated fair value of £0.93. While revenue growth is steady at 6.8% per year, earnings are projected to surge by 35.2% annually—far outpacing the broader UK market. However, investors should note that profit margins have contracted from the previous year.
Man Group Limited (LSE:EMG)
The investment manager appears deeply discounted, trading at £2.6 against a fair value estimate of £4.52—a 42.5% gap. Its earnings are forecast to grow by 32.7% per year. The attractive 4.8% dividend yield, however, comes with a caveat: it is not yet fully covered by earnings, which could concern income-focused shareholders.
Zotefoams plc (LSE:ZTF)
The polyolefin foam manufacturer is trading at £4.11, a 15.8% discount to its £4.88 fair value estimate. It boasts the most aggressive earnings growth forecast of the trio at 49.2% per annum and has provided bullish revenue guidance for 2025. Recent executive changes add an element of strategic uncertainty, however.
Analyst Commentary:
"This is a classic 'baby thrown out with the bathwater' scenario," says David Chen, a portfolio manager at Albion Capital. "Macro fears are creating specific opportunities in companies with solid fundamentals and strong growth trajectories, like NIOX and Zotefoams."
Anya Sharma, an independent retail investor, is more cautious. "I'm wary of these 'undervalued' calls. The discount on Man Group is huge for a reason—that dividend looks shaky. In this environment, safety and cash flow coverage are paramount."
More sceptical is Marcus Thorne, a veteran City commentator. "This is spreadsheet investing at its worst," he argues. "Plugging in rosy growth assumptions years out while ignoring near-term margin erosion and macro headwinds is how you get hurt. China's slowdown isn't a blip; it's a structural shift that will weigh on global earnings for quarters to come."
This analysis is based on historical data and analyst forecasts using an unbiased methodology. It is not intended as financial advice and does not constitute a recommendation to buy or sell any security. It does not consider individual objectives or financial circumstances. Simply Wall St has no position in any stocks mentioned.