3 speculative small cap shares brokers like – and you might too

These 3 speculative small cap shares are on brokers minds right now

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Speculative players are worth keeping an eye on, even if you're not inclined to part with your hard-earning cash until their potential growth becomes reality.

These 3 speculative small caps are on brokers' minds right now, so that's always a good place to start when seeking out some watch and waits for your list.

Paladin Energy Ltd (ASX: PDN)

Uranium production and exploration company with projects throughout Australia, Canada and Africa, Paladin Energy Ltd, has been listed as a buy opportunity by Hartleys.

The broker believes the stock's long road to recovery is nearing an end, initiating coverage of the company with a speculative buy rating and a 12-month target price of 22c per share.

According to Hartleys, uranium prices need to recover to at least US$50/lb over the next two to four years to allow supply to meet even conservative assumptions on demand, and Paladin offers investors "the most liquid play on uranium on the ASX".

Paladin entered into administration late last year after issues with a long-term supply agreement with Electricite de France.

But the company announced earlier this year it had a production restart planned for its Langer Heinrich project and had emerged from its administration period.

Paladin's other key asset is its Kayelekera mine with a portfolio of exploration assets at various stages of appraisal.

Paladin has managed to reduce debt from US$739 million to US$120 million and has appointed a new board and CEO during its restructuring period and Hartleys believes it's "one of the more leveraged" companies as the uranium prices recover.

One to watch.

EQT Holdings Ltd (ASX: EQT)

Wilsons has placed a buy rating on financial services company EQT Holdings Ltd with the broker of the belief the company's base business "is set to consistently deliver double-digit earnings growth near term".

According to Wilsons, EQT is set to benefit from an increasingly supportive regulatory backdrop and has a strong management team.

Wilsons has a 12-month price target of $26.16 on EQT which opened today up 1.3% to $22.80.

EQT is a conservative player and the broker thinks EQT's focus is both "considered and sustainable" with merger and acquisition bolt-ons likely in the short to medium term.

EQT posted strong interim and full year results for 2018 and its main risks remain to be client losses and weak equity markets, while regulatory changes in the industry will likely act as growth catalysts going forward.

McPherson's Ltd (ASX: MCP)

Consumer products company McPherson's Ltd markets and distributes a range of health, beauty and household consumables.

CCZ Equities Research has a buy recommendation on the stock at present but has downgraded its price target from $1.88 to $1.59.

McPherson's share price was up 3.7% at the time of writing to $1.38.

According to CCZ, McPherson's is expecting around 5% growth rate in its core brands for the first quarter of 2019, but recent outlook statements from the discretionary retail sector have dampened the broker's revenue growth outlook forecast for the peak December period.

As a result, the broker has reduced FY19 revenue expectations by $10 million to $209 million.

However, McPherson's growth model, particularly in China, is likely to continue fairly strongly throughout FY19 – driven by its Dr LeWin's, Karen Murrell and A'kin brands.

Investors should keep an eye on AGM commentary on November 21 and the future possibility of merger and acquisition activity in the short to medium term.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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