The winger has long been linked with a move to St James' Park.
The Magpies have long been linked with a move for the Tottenham winger, with him currently far down the pecking order at White Hart Lane.
A move is yet to have been agreed though, with Spurs thought to be playing hardball and wanting £14 million for their man, according to Sky Sports.
Sherwood though, who managed the winger during his spell in charge in London, says that the player could be an excellent signing as he could win enough games to keep them in the Premier League.
“They certainly will have funds to spend,” he told Match of the Day.
“They’re obviously tracking Andros Townsend, who would be an outstanding signing for them.”
“He could win games; he could possibly win enough games to keep them in the league.”
Townsend would certainly add some much needed width to Newcastle’s team at present, with it being something they are missing.
Moussa Sissoko is arguably their most potent wide player in the squad, but he struggles to maintain his form over a season and is more of an attacking midfielder than an out and out winger.
He would be keen to impress as well, with his career having stalled significantly in recent months at Spurs and an England place a distant memory as a result.
Whether though, Steve McClaren’s side are willing to pay such a big asking price seems unlikely, with it seeming an exorbitant price for Townsend’s services.