I think there are some ASX shares that look surprisingly cheap compared with what they could earn over the next few years.
Here are three companies that I think are worth buying at current prices.
Qantas Airways Ltd (ASX: QAN)
I think Qantas is a stronger business than its current valuation suggests.
The airline has a powerful position in Australian aviation, with its premium Qantas brand and budget-focused Jetstar business allowing it to serve different types of travellers.
Its loyalty division is another valuable part of the business, generating earnings that aren't entirely dependent on people booking flights.
I also like the opportunity for Qantas to benefit from its ongoing fleet renewal programme, which should gradually improve operating efficiency and the customer experience.
With Qantas shares trading around $8.41, I think investors are getting this business at a very reasonable price.
Consensus forecasts suggest earnings per share (EPS) of $1.04 in FY27, rising to $1.50 by FY29. That puts the shares on a PE ratio of approximately 8 times FY27 earnings and just 5.6 times FY29 earnings.
Airlines typically trade on lower earnings multiples because of their exposure to fuel prices, economic conditions, and substantial capital requirements.
But I think Qantas has emerged as a structurally stronger business, and its current valuation doesn't fully reflect that.
There is also a potential FY27 dividend yield of approximately 4.7%. For me, that's an attractive combination of potential earnings growth and income.
Jumbo Interactive Ltd (ASX: JIN)
Another ASX share I think looks cheap is Jumbo Interactive. The company operates the Oz Lotteries platform, allowing customers to purchase lottery tickets online.
I like its exposure to the ongoing shift towards digital lottery sales, as well as its efforts to build a broader lottery software and services business.
There is, however, an important uncertainty hanging over the company. Its reseller agreements with The Lottery Corporation Ltd (ASX: TLC) expire in August 2030, and there is no guarantee they will be renewed on equally favourable terms.
These agreements represented a significant portion of Jumbo's FY26 revenue, so I certainly wouldn't expect the shares to command a premium valuation.
But I think the current discount looks excessive. At approximately $5.87, Jumbo shares are trading at just 7.7 times forecast FY27 earnings.
They also offer a potential dividend yield of approximately 5.8%, based on consensus estimates. I think that's a low price for an established, profitable business that still has opportunities to expand.
The contract uncertainty deserves attention, but I would be happy buying at this valuation.
Collins Foods Ltd (ASX: CKF)
My final pick is Collins Foods, which operates KFC restaurants across Australia and parts of Europe.
What I like is the potential for earnings to improve as the company works to strengthen its European operations while continuing to grow its Australian business.
Its recent trading update showed encouraging sales momentum in Australia and improving performance in parts of Europe. I think that provides a reasonable foundation for the earnings recovery analysts are expecting.
With Collins Foods shares trading around $8.82, consensus forecasts put the company on approximately 16.5 times FY27 earnings.
That falls to just 12.1 times FY29 earnings, assuming forecasts are achieved. There is also a potential FY29 dividend yield of approximately 4.5%.
Of course, restaurant operators face challenges from rising labour costs, food inflation, and changing consumer spending. But I think Collins Foods has an opportunity to improve profitability and expand its restaurant network over time.
At today's share price, I would be happy giving it that opportunity.
Foolish takeaway
I would be comfortable buying all three ASX shares today.
Each has its own challenges, which helps explain why investors are currently cautious. But I think their valuations leave room for attractive returns if earnings develop broadly as analysts expect.
For patient investors, I believe these could prove to be rewarding investments over the next few years.
The post Why I'd buy Qantas and these cheap ASX shares appeared first on The Motley Fool Australia.
Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive and The Lottery Corporation. The Motley Fool Australia has recommended Collins Foods, Jumbo Interactive, and The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026