Buying ASX shares when they're trading at an undervalued price can lead to market-beating performance.
If we're going to beat the market, we need to own shares in a different way to the market average. That doesn't necessarily need to be through owning businesses that are trading cheaply, it can be done by buying high-quality companies for the long-term.
I'm going to talk about two ASX shares that I think are trading at very cheap price/earnings (P/E) ratios.
Image source: Getty Images
Adairs Ltd (ASX: ADH)
Adairs sells homewares and furniture through three different businesses – Adairs, Mocka and Focus on Furniture.
I wouldn't say this business has the strongest economic moat on the ASX and it's quite heavily exposed to changes in consumer sentiment. But, those cyclical changes in customer demand and investor confidence can prove to be buying opportunities.
At the time of writing, the ASX share is down by 37% since 19 September 2025, making it seem much cheaper.
While trading conditions may be tough, the business is now trading at a very low level. Analysts from UBS currently predict that the business could generate earnings per share (EPS) of 20 cents in FY26. That means it's valued at just 9x FY26's estimated earnings.
That looks particularly cheap with the fact that the business is projected to steadily increase its net profit every year to the end of FY30. By FY30, UBS forecasts its EPS could rise to 29 cents.
Centuria Industrial REIT (ASX: CIP)
This is a real estate investment trust (REIT) that owns a portfolio of industrial properties around Australia. Its real estate is located in metropolitan locations that are in-demand by tenants and the vacancy rate is very low. This is a strong support for the rental earnings of the business.
Industrial properties are benefiting from strong demand tailwinds including e-commerce, logistics, data centres, refrigerated space and more.
The fund manager of the ASX share, Grant Nichols, said at the end of October:
CIP continues to achieve strong outcomes across its portfolio relating to leasing, capital transactions and value add initiatives. The ability to deliver these results is credited to CIP's portfolio being concentrated in Australia's urban infill markets where tenant demand is strongest, vacancy is low and supply is constrained. These urban infill assets provides multiple future opportunities for alternative, higher-use developments such as data centres and residential schemes.
At the end of FY25, it reported net tangible assets (NTA) of $3.92 per unit, so it's trading at a discount of more than 18%, which I think makes it very cheap.
In FY26, the business is expecting to generate funds from operations (FFO – rental profit) – between 18.2 cents to 18.5 cents per unit, funding a distribution per unit of 16.8 cents. That translates into a forward distribution yield of 5.25%.
