The S&P/ASX 200 Index (ASX: XJO) has had a slow year to date.
Australia's benchmark index is up less than 1% in 2026.
Inflation, global conflict and high interest rates have all weighed on investor sentiment.
However the slow rate of growth also means there are buy-low opportunities for stocks that have underperformed.
Here are two ASX shares tipped for strong growth in the next 12 months.
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Magellan Financial Group Ltd (ASX: MFG)
Magellan Financial Group is an Australian-based diversified financial services group. Its heritage business is a funds manager investing in global equities and global listed infrastructure, founded in 2006.
It has risen just 0.7% year to date, but has declined 13% since March.
The team at Morgans believe it could rise over the next 12 months.
The broker updated its outlook on these ASX shares following the company's 4Q26 AUM update.
MFG's 4Q26 AUM update showed AUM fell ~A$1bn to A$36.7bn, driven by A$2.5bn of net outflows, partially offset by A$1.7bn of positive market movements. Overall, we view this as a softer quarter.
The A$2.5bn in outflows is a step up from recent trend, running well above the A$0.3bn average outflows of the prior four quarters, and marking the largest quarterly outflow since 3Q23. We make relatively minor downgrades to FY26F/FY27F EPS on reduced AUM assumptions, following higher 4Q26 outflows than we expected. We lower our price target to A$11.26 (from A$11.29).
With the recent pullback in the share price, the broker now sees more upside and has upgraded its recommendation to an accumulate rating (previously a hold).
From yesterday's closing price, Morgan's price target indicates 14% potential upside.
Adairs Ltd (ASX: ADH)
Adairs has also struggled in 2026.
Adairs is a homewares and home furnishings retailer in Australia and New Zealand. The company has more than 170 stores across a number of formats as well as a growing online platform.
In 2026, its share price has fallen 18%.
However, the team at Morgans recently updated its outlook on the company and sees rebound potential following recent share price softness.
ADH provided a FY26 trading update, with Adairs performing ahead of expectations, Mocka largely in line, but ongoing weakness in Focus on Furniture continues to weigh on group earnings.
Group EBIT is expected to be down ~1.3%. Given the ongoing weakness in Focus on Furniture and the extended remediation time required, the group intends to recognise an impairment charge of $62-28m ($56-60m after tax). This will be excluded from underlying earnings. We have made downward revisions to our earnings in FY26/27/28.
The broker now has a $1.70 price target and an accumulate recommendation.
From current levels, this indicates an upside potential of approximately 15%.
