The S&P/ASX 200 Index (ASX: XJO) has returned close to 10% per year over the ultra-long-term, so finding ASX shares that could deliver significantly more than that could be very attractive.
Of course, returns are not guaranteed just because an expert thinks a business is undervalued. But, when experts are optimistic of great returns, it's definitely worth taking notice.
Below are two of the businesses that experts think could deliver returns of more than 40%.
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Peter Warren Automotive Holdings Ltd (ASX: PWR)
Peter Warren describes itself as an automotive dealership business that has been operating for more than 60 years. It has more than 80 franchise operations and represents more than 30 original equipment manufacturers (OEMs).
According to CMC Invest, within the last three months, there have been four analyst buy ratings and one hold rating on the business.
A price target is the level analysts expect the company's share price to reach in 12 months. According to CMC Invest, the average price target on the business is $1.41. That implies a possible rise of 47% from where it is at the time of writing.
Based on the projections on CMC Invest for FY27, the business could be valued at just 12x FY27's estimated earnings with a possible grossed-up dividend yield of 7%, including franking credits, at the time of writing.
In the FY26 half-year result, the ASX share reported revenue growth of 3.2%, underlying operating profit (EBITDA) growth of 5.9%, underlying profit before tax growth of 76.1% and earnings per share (EPS) growth of 105.7%. Time will tell how much its earnings can rise from here.
Xero Ltd (ASX: XRO)
Another ASX share that has a lot of analysts optimistic about it is accounting software business Xero. It has a presence in countries like Australia, New Zealand, the UK, Singapore, South Africa, the US and Canada.
Given how far the Xero share price has dropped in the last year, analysts think it can recover some of the lost ground.
According to CMC Invest, of nine recent analyst ratings on the business within the last three months, eight were buy ratings, and one was a hold. The average price target is $124.46, implying a possible 80% rise from its level at the time of writing.
The company continues to grow at a strong pace. In the FY26 result, it reported annualised monthly recurring revenue (AMRR) growth of 37% to $3.27 billion, boosted by 11% growth of customers to 4.92 million and average revenue per user (ARPU) growth of 23% to $55.44.
If the business continues to grow revenue, the ASX share's financials should improve and regain investor confidence.
