The Owls legend believes his former side can challenge for an automatic place next season
Waddle played in two cup finals for Wednesday
The Owls legend, who attended last month's play-off final as a supporter, witnessed his old side narrowly miss out on promotion with a 1-0 defeat to Hull City at Wembley.
Carvalhal's men were narrowly beaten at Wembley
Carlos Carvalhal's team came from nowhere to make last season's top six, and Waddle believes that another positive campaign awaits - provided the Steel City side strengthen in key areas.
"They’ve got to add three or four quality players; five maybe," Waddle said, as quoted by the Yorkshire Post.
"For me, they need a centre-forward, winger and maybe a couple of full-backs and maybe another midfield player to go in.
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"If they do that, I think they have got a real chance of going up automatically rather than just aiming for sixth and getting a play-off spot."
Wednesday finally announced their retained list this week, offering new deals to out of contract players Jose Semedo, Lewis Price and Caolan Lavery.
Should the trio extend their stays, the Owls will have a squad of 26 senior names heading into next season - even after their six loan players have returned from whence they came.
A repeat of last summer's recruitment drive, which saw 15 new faces arrive between July and September, is therefore unlikely.
Marnick Vemijl is one of four players returning to Hillsborough from loan spells