Cheap ASX shares can be excellent investments if they're being undervalued by the market. Despite the strong performance of the stock market, there are still some businesses that seem significantly undervalued to me.
Businesses can be undervalued in a variety of ways, such as the market capitalisation being cheaper than its underlying value. It could also be trading at a price/earnings (P/E) ratio that's too low for its earnings growth prospects. I'm going to outline two cheap ASX shares, one of each type of 'cheapness' I just described.
The first one seems to be trading at a very cheap earnings multiple, considering its very compelling growth prospects.
GQG Partners Inc (ASX: GQG)
GQG is a funds management business that's headquartered in the US, but it also has growing geographic footprint of clients in places like Australia, Canada, the UK and Europe.
I'm calling this business a cheap ASX share because its forward P/E ratio is less than 10, despite it growing its earnings at a rate faster than 10% per year.
Analysts from Macquarie are projecting that GQG's earnings per share (EPS) could grow by 11% in FY25 and then increase by a further 10.4% in FY26. When the earnings growth rate number is larger than the P/E ratio, I think the business is likely to deliver good returns.
It also offers a compelling dividend yield, the passive income alone can create a strong total return for investors. In FY26, it's projected by Macquarie to pay a yield of 12.5%.
The reason the cheap ASX share's growth looks likely is that its funds under management (FUM) continues rising. It charges hardly any performance fees, so FUM growth is a key driver of revenue and profit. Over the six months to June 2025, its FUM rose more than 12% to US$172.4 billion. The tailwind of a rising share market over time should help GQG's FUM, as well as the positive monthly net inflows from clients.
Centuria Industrial REIT (ASX: CIP)
The reason I'm calling this real estate investment trust (REIT) a cheap ASX share is because it's trading at a large discount to its underlying value.
Centuria Industrial REIT reported that its net tangible assets (NTA) was $3.89 at 31 December 2024. That means at the current unit price, it's trading at an 18% discount to the underlying value from eight months ago. I believe there's a solid chance the business could report higher property values as at 30 June 2025 thanks to the RBA cash rate cuts earlier this year.
Rental income continues to grow across its portfolio thanks to demand for industrial properties due to growing e-commerce adoption, a growing Australian population, more data centres and a rising need for refrigerated space (for food and medicine).
As a bonus, the cheap ASX share's FY25 distribution translates into a distribution yield of more than 5%.
