Both Smith and Warner were out of the Australian side for a year as they were serving bans for ball-tampering. However, despite being out of action for such a long time, Warner showed imperious form in the recently concluded Indian Premier League (IPL) 2019 as the opener topped the charts of run-getters with 692 runs from 12 innings, which included a ton and eight half-centuries.
Smith also showed his class during the three warm-up games against a New Zealand XI in Brisbane after scores of unbeaten 89 and 91.
"Every side will be wary of Australia. They know the potential of the Australian side. There's been turmoil in Australian cricket over the last 12 months, but that has been put aside now. We've got our best players available to be picked in Smith and Warner," Waugh was quoted as saying by the ICC.
Despite some poor shows in the previous year, the five-time world champions raised their game just ahead of the showpiece event. In their tour of India, the Aussies were trailing 0-2 but notched a hat-trick of wins to register a 3-2 win in the five-match rubber. They didn't look back from there and whitewashed Pakistan 5-0 in another ODI series in UAE.
"Their form was very poor, but all of a sudden, they've won their last eight matches, and they've got Smith and Warner in the team. And that is ominous for other sides, they know how good these sides are," the former Australia captain expressed.
"Australia will be one of the teams probably not the favourite for the tournament, but the team that other sides will be probably most fearful of. They could do some damage. So I think Australia could go really deep in the tournament," he added.
Speaking on the teams considered favourites for the World Cup, Waugh said: "England to me are probably the favourites - their form has been outstanding over the last couple of years. They are playing at home. Sometimes, that creates more pressure, but they've got a really good coach in Trevor Bayliss to keep the players grounded."
"So I think England would be favourites, and probably Australia and India on that second line of favouritism," he added.