I believe that underrated ASX shares could be among Australia's biggest winners in 2025.
The companies delivering excellent financial results are priced highly for their success. I'm thinking of names like Pro Medicus Ltd (ASX: PME) and WiseTech Global Ltd (ASX: WTC). They're not at bargain prices, that's for sure.
I'd name ASX shares like Brickworks Ltd (ASX: BKW), Tuas Ltd (ASX: TUA) and Centuria Industrial REIT (ASX: CIP) as my preferred opportunities.
However, the two stocks below could be the biggest winners if they prove doubters wrong and achieve materially positive returns, in my view.
They both have low price/earnings (P/E) ratios, so it wouldn't take much for the market to re-rate them higher.
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GQG Partners Inc (ASX: GQG)
GQG is one of the larger fund managers on the ASX, but it has suffered amid a legal case in the United States being brought against one of its main investments – Adani. For starters, it's anyone's guess if and how that case progresses under the new US administration.
With the GQG share price down 27.5% from 11 November 2024, the company isn't priced for much success in 2025. But there's a fair chance that retail investors and institutions may want to deploy more capital with GQG's funds because of newly appointed US President Donald Trump's policies aimed at assisting businesses and investment.
The ASX share has a track record of outperforming various applicable benchmarks and growing FUM. I think it could return to good FUM growth during 2025 and surprise investors. As a reminder, the HY24 result reported an average FUM growth of 46.5% year over year to US$139.5 million. At the end of December 2024, it had FUM of US$153 billion.
According to the forecasts on Commsec, the GQG share price is valued at 8.5x FY25's estimated earnings with a projected dividend yield of 10.6%.
BlueScope Steel Limited (ASX: BSL)
The BlueScope share price is down 10% from its November 2024 high, but I think the company could be a contender to surprise the market this year.
I'm not expecting BlueScope to deliver a 200% return this year, but the ASX share could be a dark horse to deliver good returns for a couple of reasons.
The fund manager L1 Capital recently outlined that excess Chinese steel production had resulted in elevated Chinese steel exports, pressuring prices across the region.
According to L1, US steel markets have also weakened. To address this, the company is looking to cut around $200 million in costs and improve productivity, which should support profit margins.
The other factor I'll point to is that the new US administration appears motivated to use American-made products in the US. This suits BlueScope because it has a large steelmaking facility there called North Star. Potential US tariffs on foreign steel could be a game-changer, and BlueScope is looking to expand this US facility.
According to the forecasts on Commsec, the BlueScope share price is valued at 11x FY26's estimated earnings.
