Small cap ASX shares can be great additions to a balanced investment portfolio. This is because they tend to offer stronger than average returns.
However, as they are higher risk options, they are generally unsuitable for investors with a low tolerance for risk.
With that in mind, if your risk tolerance allows for it, here are a couple of small cap ASX shares that could be in the buy zone right now according to analysts:
Aeris Resources Ltd (ASX: AIS)
Analysts at Bell Potter are bullish on this copper miner and see a lot of value in its shares at current levels.
The broker currently has a buy rating and 30 cents price target on its shares. This implies potential upside of 36% for investors over the next 12 months.
Bell Potter believes the company would be a great option for investors looking for copper exposure. It explains:
AIS represents a copper dominant mining exposure whose primary assets are the Tritton Copper Operations in NSW, Cracow Gold Mine in QLD, Mt Colin Copper Mine in QLD. Its near-term outlook is highly leveraged to rising copper grades at the Tritton copper mine, where new high grade ore sources are driving production growth through CY24 and exploration success at Constellation is likely to sustain higher production levels over the long term. The Cracow gold mine in QLD offers an unhedged gold exposure that is highly leveraged to a rising gold price. Recent refinancings have de-risked the balance sheet and we are of the view that AIS is well positioned to deliver on its production targets.
AVITA Medical Inc (ASX: AVH)
Over at Morgans, its analysts think that this commercial-stage regenerative medicine company could be a small cap ASX share to buy.
The broker currently has a buy rating and $5.60 price target on its shares. This suggests that upside of 75% is possible for investors from current levels.
Morgans likes the company due to the huge growth opportunity for its Recell product in numerous markets. It explains:
AVH is a regenerative medicine company focusing on the acute wound care market. It has recently expanded its indication into full thickness skin defects and Vitiligo (US$5bn TAM). The expanded indication in full thickness skin defects has the required reimbursement in place and sales have started. AVH has provided revenue guidance for FY24 of growth of ~64% and importantly has guided to achieving profitability by 3QCY25. At the same time, the company is seeking approval [now has been approved] by the FDA for its automated device RECELL Go, which if successful will launch 1 June 2024, and will be a meaningful driver of rapid adoption by clinicians.
