Undervalued ASX Stocks coming on investors’ radar

Massive wealth can be created by buying strong businesses when they are beaten down and the following ASX stocks fall into that category which makes them worthy of consideration for long-term portfolios.

Xero Limited (ASX: XRO) 

is one of the most compelling undervalued ASX stocks after a sharp share price correction which appears disconnected from its underlying fundamentals.

Operating revenue In H1 FY26 increased 20% year-on-year to NZ$1.19 billion while adjusted EBITDA reached NZ$351 million which reflects a 29.4% margin.
Gross margin remained strong at 88.5% and free cash flow rose to NZ$321 million with a 26.9% margin supported by subscriber growth to 4.59 million which shows the company can convert recurring revenue into cash efficiently as ARPU increased to NZ$49.63.

Key business metrics such as subscribers, ARPU, margins and free cash flow have continued to expand which highlights strong operating leverage within its SaaS model because the business benefits from high switching costs.

Market concerns around AI disruption have pushed the share price down about 57.7% over the past 12 months which seems to be irrational when compared to the company’s financial and operational progress.

IPH Limited (ASX: IPH) 

has been underestimated by the market due to slowdown fears even though group revenue during the first four months of FY26 increased by 7% compared to the same period last year.
Underlying EBITDA rose by 13% to $72.4 million which was supported by cost reductions, acquisition synergies and improved performance across Canada and Asia.

IPH has a market capitalisation of $885 million and has maintained a strong position in key secondary intellectual property markets which is supported by the scale benefits of its global platform.

The company follows a disciplined capital management approach which includes returning cash to shareholders through dividends that are often partially franked and it currently offers an annual dividend yield of 10.78%.

IPH has a current P/E ratio of 13.17 and confirmed that it will release its half year results for the period ended 31 December 2025 on 19 February 2026 which should provide more clarity around the slowdown concerns.

Kogan.com Limited (ASX: KGN) 

became an undervalued stock after a 34.75% fall in its share price over the past 12 months and the company plans to release its 1HFY26 results on 23 February 2026.
In FY25, Gross Sales rose 15% year-on-year to $930.9 million while Gross Profit increased 13% to $189.9 million and Adjusted EBITDA stood at $36.8 million which reflects better operating leverage across the Group.

Group Active Customers increased 35% to 3.5 million which was driven by focused marketing investment that helped expand customer acquisition and strengthen the platform ecosystem.

The Group reported a statutory loss due to a one-off non-cash goodwill impairment of $46.3 million related to Mighty Ape which affected reported earnings although the core business remained profitable on an adjusted basis and management expects margin improvement through FY26.

Free cash flow rose 40% to $32.4 million and the company finished the year with $42.1 million in cash and no debt which supports the strength of its capital light and cash generative model while the current annual dividend yield stands at 4.58%.

(Source: Company Reports)