2 cheap ASX shares to add to your portfolio before they get expensive

Analysts think these shares are undervalued at current levels.

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The market may be trading close to its record high, but that doesn't mean there aren't any cheap ASX shares out there for investors to buy.

For example, the two ASX shares listed below could be undervalued at current levels and be destined to generate big returns according to analysts.

Here's what they are saying about these shares:

Accent Group Ltd (ASX: AX1)

The first ASX share that could be cheap is Accent.

It is a digitally integrated consumer business in the retail and distribution sectors with a focus on performance and lifestyle footwear, apparel, and accessories. At the last count, the company had a total of 888 stores across brands such as The Athlete's Foot, Platypus, and HypeDC.

Analysts at Bell Potter think its shares are cheap at current levels. The broker estimates that they are trading at 13.9x FY 2024 earnings and 11.8x FY 2025 earnings.

In light of this, its analysts see potential for huge returns for investors picking up shares at current levels. They have a buy rating and a $2.50 price target on them, which implies a potential upside of 37%. In addition, the broker is forecasting dividend yields of 7%+ through to at least FY 2026.

Commenting on its bullish view, the broker said:

We remain constructive on AX1 given the scale & exposure in terms of channels, brands & size as the overall industry navigates a challenging retail spend environment in addition to growing a vertical brand strategy (~8% on owned sales) and growth adjacencies within TAF & via exclusive partnerships with globally winning brands as Hoka. Retain BUY.

Inghams Group Ltd (ASX: ING)

Another ASX share that could be cheap at current levels is Inghams. It is a leading producer and seller of poultry products.

The team at Morgans thinks its shares are severely undervalued at current levels. Particularly given its leadership position and big dividend yield. The broker estimates that Inghams' shares are trading at 11.3x FY 2024 earnings and 10.9x FY 2025 earnings.

It feels they deserve to trade on higher multiples and has put an add rating and $4.40 price target on them. This implies a potential upside of 18% for investors. In addition, it is forecasting fully franked dividend yields of 5.9% this year and 6.2% next year.

The broker commented:

ING remains undervalued trading on a low PE multiple, especially for what is a market leader, with a vertically integrated operating model and assets that are difficult and costly to replicate. It is also leveraged to poultry – the affordable, healthy, sustainable and growth protein. Additionally, ING offers an attractive fully franked dividend yield.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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