Given the strong potential returns on offer at the small end of the market, it could be worth adding a few small cap ASX stocks to a balanced investment portfolio if you have a high risk tolerance.
But which small caps could be top options for investors in September? Let's take a look at two that could be worth considering:
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Aroa Biosurgery Ltd (ASX: ARX)
Bell Potter thinks that Aroa Biosurgery could be a small cap ASX stock to buy.
It is a medical device company focused on wound repair. It uses a decellularised extra cellular matrix derived from ovine (sheep) gut for wound healing and soft tissue reconstruction.
The broker believes the company could be well-placed for growth over the coming years thanks to growing demand for its technology. It said:
The Myriad product achieved the highest rate of revenue growth in FY24. It is applied in the surgical setting to provide a substrate for regeneration of soft tissue and for reconstructive surgery. In FY24 revenues grew by 75% to NZ$23.3m and we expect a similar growth rate in FY25 and FY26 driven by an expanded user base and data from the Myriad Augmented Soft Tissue Regeneration Registry (MASTRR). ARX also expects to report data from its 120 patient randomised clinical trial in diabetic foot ulcer patients. The trial is investigating the healing properties of the Symphony product. Earlier studies in a very difficult patient population with advanced DFU's provided highly supportive data on the rate of wound healing.
Bell Potter has a buy rating and 90 cents price target on its shares. This implies potential upside of approximately 70% for investors from current levels.
Camplify Holdings Ltd (ASX: CHL)
Another ASX small cap stock that has been given the thumbs up Camplify.
It operates one of the world's leading peer-to-peer digital marketplace platforms, connecting recreational vehicle (RV) owners to hirers. It has operations in Australia, New Zealand, Spain, the UK, Germany, Austria and Netherlands.
Analysts at Morgans are feeling very positive about the company's long term growth outlook thanks to opportunity both at home and abroad. They explain:
We expect CHL to continue to grow into its large addressable market locally, with over 790k registered RVs in Australia and ~130k in NZ. CHL only has ~2% of these on its platform. It has broadly doubled its domestic fleet since listing and with its acquisition of Germany- based PaulCamper (PC) now has a total fleet of over 29,000, making it a true global player.
Morgans has an add rating and $2.55 price target on its shares. This is more than double where its shares are currently trading.
