There are several quality ASX shares currently labelled as undervalued, and some of them could provide investors with a significant upside over the next 12 months.
Here are two of my favourite undervalued stocks, which I believe are poised to surge.
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Woodside Energy Group Ltd (ASX: WDS)
It's been a rollercoaster ride for Woodside Energy shares over the past 12 months. The share price crashed to a four-year low of $19.15 per share in April. This followed the company's announcement that it had a binding agreement to sell its 40% interest in a Louisiana gas plant for US$5.7 billion.
The oil and gas giant was also subject to an oil price plunge around the same time. This further dragged down its share price.
After bottoming out in April, Woodside Energy's share price slowly recovered to an annual high in August, before taking a steep nosedive once again.
Between 26 August and the close of the ASX on Wednesday, the share price has dropped 15.61% to $22.18 per share. Over the year, the shares are 13.4% lower.
But it's not all bad news.
Woodside Energy shares are repeatedly flagged as undervalued by analysts who expect a spike in global energy demand to push energy share prices higher.
According to TradingView data, 7 out of 16 analysts have a buy or strong buy rating on the shares. The remainder have a hold rating.
The data shows analyst estimates for an average 12-month target price of $26.38 and a maximum of $33.08. That represents a potential 15.7% to a whopping potential 45% upside for investors at the time of writing.
Baker Young said the ASX share is undervalued at current levels, is trading at a significant discount to its valuation, and has a generous forecast dividend yield. The broker said it thinks this could be an attractive entry point for investors.
Meanwhile, Morgans has an accumulate rating and $29.60 price target on the shares. This represents a potential 33.5% upside for investors.
Sentiment is certainly divided, though. Macquarie Group isn't as optimistic and recently confirmed its neutral rating and $24 price target on Woodside Energy shares. That still represents a potential 8.2% upside over the next 12 months.
AGL Energy Ltd (ASX: AGL)
AGL shares have declined in value steadily over the past year, before experiencing a sharp 21.43% plunge in August to a 2.5-year low of $8.03 per share.
The share price has since started recovering and is 12.33% higher at $9.02 apiece, at the time of writing. For the year, AGL's shares are 24.46% lower.
The heavy sell-off followed the release of the company's FY25 results in mid-August. Investors were spooked by the company's 9% drop in EBITDA, 21% decline in net profit, and $98 million loss after tax.
Like Woodside Energy shares, AGL shares are now attractively priced, and there are signs of green shoots of price recovery.
According to TradingView data, 8 out of 11 analysts have a buy or strong buy rating on AGL shares. The average target price is $11.10, and the maximum is $12.10. These target prices represent a potential 23.01% to 34.15% upside for investors at the time of writing.
Macquarie analysts recently confirmed their outperform rating on AGL shares and $11 target price. This represents a potential 22% upside for investors over the next 12 months, from the current trading price. The broker cited tailwinds from rising power prices.
