This is a great time to look at ASX shares that look significantly undervalued, so here are two that have significant growth potential.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
I think it’s nearly always a great idea to invest in high-quality businesses at a good price, which is essentially what this exchange-traded fund (ETF) does.
The fund is aiming to find US-listed businesses that have competitive advantages (or economic moats) that are expected to last for two decades. Sticking to these sorts of shares should mean long-term profit growth, which is usually what investors want to see to send share prices higher.
Another element to this ETF is how it invests in these wide moat businesses when they’re priced attractively compared to Morningstar’s estimate of fair value. Meaning, these shares are good value.
With the Aussie dollar currently sitting at US$0.71, this seems like a particularly good time to invest in US shares.
The MOAT ETF has returned an average of 14.7% per year over the past decade, showing the strategy works over the long-term.
Pro Medicus Ltd (ASX: PME)
The Pro Medicus share price has had a crazy journey in the last few years. The ASX share is up 185% in the last five years, but down close to 50% in the past six months.
This business provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare organisations.
While worries how AI disruption may be valid to consider, the company’s financials continue to show excellent performance.
In the FY26 half-year result, revenue soared 28.4% to $124.8 million and underlying profit before tax jumped 29.7% to $90.7 million.
It has some of the highest profit margins on the ASX, with an underlying EBIT margin of 72.6%. With a margin that high, close to three-quarters of new revenue is turning into underlying profit.
Pro Medicus continues to win contracts, which I think bodes well for the company’s foreseeable future.
Its latest major win is the five-year, A$37 million contract renewal from Northwestern Medicine, which was negotiated with increased minimums and an increased fee per transaction.
According to the profit projection on Commsec, the Pro Medicus share price is now valued at 74x FY27’s estimated earnings.
I think the ASX share has a very compelling future, even if the future could face more competition. That doesn’t necessarily mean those competitors are going to be better than Pro Medicus, or do a better job of winning contracts.
