These small cap ASX shares can rise 30% to 80%: Bell Potter

Its analysts see huge upside potential for these small caps from current levels.

| More on:
A man in his office leans back in his chair with his hands behind his head looking out his window at the city, sitting back and relaxed, confident in his ASX share investments for the long term.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There could be some very big returns on offer at the small side of the market according to analysts at Bell Potter.

For example, the broker has just reaffirmed its buy ratings on small cap ASX shares Genetic Signatures Ltd (ASX: GSS) and Clarity Pharmaceuticals Ltd (ASX: CU6).

In respect to Genetic Signatures, it is a molecular diagnostics company focused on the development and commercialisation of its proprietary platform technology, 3base. It is used to improve the diagnosis of infectious diseases.

Why is it a small cap ASX share to buy?

Bell Potter notes that the small cap recently conducted a $15.9 million capital raising. This will be used to support a commercial launch in the United States. It believes this leaves the company well-positioned to hit the ground running if the FDA approves its product. It said:

GSS are in the process of providing Additional Information to the FDA following a 60- day Substantive Review of the GI Parasite Detection Kit, a normal course of proceedings for 510(k) applications such as this. We remain confident in the likelihood of clearance, most likely around May 2024. There are 6 US lab sites that have already installed and are evaluating the product and these labs could swiftly convert to paying customers following FDA clearance.

We had assumed an FY24 capital raise so there were only minor changes in our valuation due to the number and price of new shares issued. Valuation is now $0.80 down from $0.83. We maintain a BUY (speculative) recommendation and see positive risk-reward ahead of the major FDA catalyst. The improved balance sheet position alleviates near-term funding concerns and provides ample cash runway for FDA clearance and US sales ramp up.

Bell Potter has a speculative buy rating and 80 cents price target on its shares. This suggests a potential upside of approximately 84% for investors over the next 12 months.

Another small cap to buy

Bell Potter also believes that Clarity Pharmaceuticals shares can rise strongly from current levels.

This week, the broker put a speculative buy rating and $3.00 price target on the radiopharmaceutical company's shares. This implies a 36% upside for investors from current levels.

Its analysts are very positive on the small cap ASX share's SAR-bis-PSMA platform. It explains:

Clarity's SAR-bis-PSMA platform is emerging as a highly differentiated platform for the imaging and treatment of mCRPC. The IP protection is top shelf compared to existing platforms and combined with the emerging clinical data, we believe the company has a promising future. Earnings adjustments include increases to R&D spend over the forecast period following commencement of approval studies. Valuation is increased from $1.70 to $3.00.

Finally, it is worth highlighting that these are speculative buy ratings. This means that they may only be suitable for investors with a high tolerance for risk.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Small Cap Shares

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Small Cap Shares

ASX small-cap stock rockets 25% on 'another period of profitable growth'

Why is this small cap getting a lot of attention on Wednesday?

Read more »

Two kids in superhero capes.
Small Cap Shares

Are ASX small-cap shares back in vogue amid a big shift?

Could a rotation out of large-caps be underway?

Read more »

Three children wearing athletic short and singlets stand side by side on a running track wearing medals around their necks and standing with their hands on their hips.
Share Gainers

3 ASX small-cap shares that soared 250% to 675% in FY24

ASX small-cap shares can offer potentially higher price growth but typically involve more risk.

Read more »

A man in a business suit holding a baby conducts a task on his phone
Small Cap Shares

Why I'm bullish about this exciting ASX small-cap share

The foundations are compelling with this stock.

Read more »

The Two little girls smiling upside down on a bed.
Small Cap Shares

Is it time to jump back into ASX small-cap shares?

One fund manager has revealed why it could be time to invest in smaller stocks.

Read more »

three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.
Opinions

3 ASX small-cap shares I think have explosive growth potential

Here's my list of 3 ASX small-cap shares for growth.

Read more »

A woman's hair is blown back and her face is in shock at this big news.
Small Cap Shares

Guess which small cap ASX stock could rise 45%

Bell Potter thinks investors should buy this small cap going through an "exciting growth phase."

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Small Cap Shares

Guess which small cap ASX stock could rise 50% in a 'transformational year'

This small cap has been tipped to rise materially from current levels. But why?

Read more »