The cheap ASX share space is a great hunting ground to deliver outperformance, in my view. Finding growing businesses with a low valuation can be a winning combination.
It doesn't take a lot for cheap businesses to outperform (low) market expectations, in my opinion.
As a bonus, if the cheap ASX share pays a dividend, it can typically come with a higher dividend yield. The higher a valuation (in price/earnings (P/E) ratio terms), the lower the dividend yield is pushed.
I think the two stocks below are being undervalued by the market. I'm excited by them.
Centuria Industrial REIT (ASX: CIP)
This is one of my favourite real estate investment trusts (REITs) right now, which owns industrial properties across Australia. Let's start with what makes it a cheap ASX share, in my mind.
It had net tangible assets (NTA) per unit of $3.89 as at 31 December 2024, so the unit price is trading at a discount of 23% to its underlying value.
The business is trading so cheaply that it's offering a good distribution yield. It's expecting to pay a distribution of 16.3 cents per unit, which translates into a forecast yield of 5.5%
Its portfolio is benefiting from tenant demand for well-located properties. It's benefiting from tailwinds like the growth of online shopping, data centres, refrigerated spaces (for food and pharmaceuticals) and the overall Australian population.
I believe this cheap ASX share can deliver both rental growth and a recovery of its unit price towards its NTA per unit.
GQG Partners Inc (ASX: GQG)
This is one of my favourite investment ideas at the moment, following its 12% drop since 17 February 2025 and the 20% decline in the past six months.
The funds management business has taken a hit amid global stock market volatility because of the headwind that presents for funds under management (FUM). FUM is a key input for the company's revenue and profit.
However, I don't think the global share market is going to decline forever – I'm hopeful there will be a turnaround sooner rather than later. When that eventually happens, it would be a helpful, organic tailwind for the company's FUM again.
I believe the cheap ASX share could continue to attract new client money to manage. In the month of March 2025, it experienced total net inflows of $1.8 billion. That's a good sign for more net inflows this year, in my view.
According to the forecasts on Commsec, it's valued at just 9x FY25's estimated earnings with a potential dividend yield of 9.8%.
