When it comes to finding undervalued stocks amid all of the market noise, it can pay to turn to the experts for advice.
I've had a look at the research reports coming out this week and selected three from UBS that make the case why they consider the shares profiled worthy of a buy rating.
Let's see what they're saying.
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A2 Milk Company Ltd (ASX: A2M)
Shares in A2 Milk have underperformed over the past 12 months, giving up about 22% of their value over that time.
The company's fortunes have been battered by a product recall in the US in May, which followed the company downgrading its FY26 guidance in April.
At the time, the company said it was "experiencing temporary in-market product availability issues'' in China, and that it expected revenue growth in the low to mid double digits, where it had previously been mid double digits.
The UBS team said they believed the stock had been oversold.
They said:
While unanswered questions remain following China supply shortages and the US product recall, A2M's derating of 35% captures a significantly greater permanent value loss compared to UBS at 12%.
The UBS team said they believed the likelihood of further infant formula recalls was low, and FY26 earnings risk had moderated with China restocking underway.
They said they expected net profit to double by FY30, driven by market share gains, "plus margin expansion from internalised manufacturing''.
UBS has a price target of NZ$9.20 on the stock, compared to NZ$7.81 at the moment.
Spark New Zealand Ltd (ASX: SPK)
UBS said in its research note that shares in this broadband and mobile services provider had underperformed the NZX50 by 15% year to date.
They said various factors could be involved in the drop, including a weak economy, continued market share loss, and the possibility of a dividend cut.
But the UBS team believes the sell-off is overdone.
They said:
FY26 guidance and FY27 consensus assumes minimal growth which is similar to One NZ outlook. Current share price implies virtually no growth into perpetuity which in our view fails to take into account that the NZ economy will recover – it's just been delayed by six months.
UBS has a price target of NZ$3 for Spark shares, compared to NZ$1.84 currently.
Challenger Ltd (ASX: CGF)
Shares in Challenger are up a healthy 24.9% over the past 12 months, but the UBS team thinks they still have a way to run.
They said Challenger's recent deal, to merge its Fidante business with Channel Capital, was a positive.
They said:
While CGF will retain a 45% stake in the more diversified group with greater scale to support long-term growth, it will allow CGF to focus squarely on its key Life division where stronger growth prospects are emerging across retail, institutional and reinsurance channels. With improving Life growth prospects and reduced regulatory capital intensity ahead, we continue to see compelling value headroom.
UBS has a price target of $11 on Challenger shares compared to $9.79 currently.
