Stock Pick

Brokers say these 2 ASX shares are highly undervalued — here’s why I agree

Written by

openjargon

in

Buy and sell keys on an Apple keyboard.

Share prices are always changing, so there are always opportunities to invest in ASX shares that are undervalued.

Multiple experts have called the two ASX shares in this article a good value buy, and I’d definitely agree with them.

Both of the businesses are delivering strong core growth and have plans for more.

Universal Store Holdings Ltd (ASX: UNI)

According to CMC Invest, there have been nine recent analyst ratings on the business, with all of those being a buy. Collectively, those analysts think the business could rise by around 50% over the next year, with a price target of $9.79.

I don’t know whether it’ll rise that much, but I do think the business is undervalued because of how well it’s growing.

The business sells premium apparel to younger, fashion-focused customers through its two main businesses – Universal Store and Perfect Stranger.

In the first 43 weeks of FY26, the ASX share reported total sales growth of 14%. The Universal Store brand saw total sales growth of 11.8% (with like-for-like sales growth of 8.5%) and Perfect Stranger saw total sales growth of 39.8% (with like-for-like sales growth of 12.9%).

Excitingly, the company is expecting its underlying profit (EBITA) profit margin to increase in FY26, which could help the net profit after tax (NPAT) metric to rise faster than revenue. FY26 EBITA is expected to rise by around 15% (at the mid-point of its guidance).

When a business trades on a relatively low earnings multiple and is growing profit by more than 10% per year, it looks very attractive to me.

According to the forecast on CMC Invest, the business is trading at just 12x FY26’s estimated earnings.

Sigma Healthcare Ltd (ASX: SIG)

Sigma Healthcare is the name behind the brand Chemist Warehouse, Australia’s leading chemist chain.

But, it hasn’t reached a point where its Australian growth has significantly slowed.

Chemist Warehouse’s Australian network saw total sales grow by 16.7% between 1 July 2025 to 30 April 2026, while like-for-like growth was 14.4%. It continues to add new stores to its network, which can help boost both sales and scale benefits.

The ASX share’s international store network growth has also very pleasing, though it’s a much smaller dollar amount at this stage. International total sales for 1 July 2025 to 31 March 2026 was 24.7%, while like-for-like growth was 11.8%. Currently it’s in New Zealand, Ireland, Dubai and China.

It’s also expanding into the UK, another large market for the company.

According to CMC Invest, there have been eight recent buy ratings on the business, with an average price target of $3.25.

In five years, I think the ASX share could be a much bigger, more profitable business.

The post Brokers say these 2 ASX shares are highly undervalued — here’s why I agree appeared first on The Motley Fool Australia.

Should you invest $1,000 in Universal Store right now?

Before you buy Universal Store shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Universal Store wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys…

See the 5 Stocks

* Returns as of 20 Feb 2026

.custom-cta-button p {
margin-bottom: 0 !important;
}

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More posts