Investors with a high tolerance for risk might want to check out these small cap ASX stocks in this article.
That's because they have been named as buys and tipped to generate big returns in 2025. Here's what analysts are saying about them:
Bluebet Holdings Ltd (ASX: BBT)
The first small cap ASX stock that could deliver big returns for investors is sports betting company Bluebet.
Morgans is very positive on Bluebet after it posted "another strong quarterly result." It also highlights that "the company achieved an EBITDA positive half earlier than expected, driven by accelerated synergy gains and solid trading performance."
The broker expects more of the same and anticipates a strong result later this month. It said:
Encouragingly, BBT reports that 2Q25 trading momentum has carried into 3Q25. We expect a statutory benefit in 1H25 following the US exit, though some costs from the wind-down will offset this. The company reaffirmed its confidence in achieving over 10% market share through both organic and inorganic growth. BBT will release its interim result on 27 February 2025. We have taken our forecast FY25 EBITDA up from $4.2m to $4.9m.
Morgans has put an add rating and 43 cents price target on its shares. This implies potential upside of 15% for investors from current levels.
Bubs Australia Ltd (ASX: BUB)
The team at Ord Minnett think that this infant formula company could be an ASX small cap stock to buy now.
The broker highlights that after getting rid of its previous wealth-destroying management team, Bubs now looks well-managed and positioned for a successful turnaround. It said:
After eight years, several false starts including a costly one into China, a sacked founder, a failed board spill, and a staggering $316 million in equity injections, is it safe to mention the name Bubs in investment circles? We are of the view that it is.
For any investor that has previously written-off the company, we believe it is time to revisit Bubs get exposure to what we forecast to be an outstanding 2025 turnaround story. Bubs is currently displaying all of the essential ingredients for a successful turnaround, i.e. anew and competent management team that has had enough time to steady the ship, a good product with sufficient gross profit (GP) margins, and a multi-year double-digit growth profile.
Ord Minnett recently initiated coverage on Bubs with a buy rating and 20 cents price target. This suggests that upside of over 70% is possible for investors over the next 12 months.
Readytech Holdings Ltd (ASX: RDY)
Finally, Morgans also rates this software provider as an ASX small cap stock to buy right now.
Its analysts think that Readytech's shares are too cheap considering its strong earnings growth outlook. The broker said:
RDY's recent organic growth trajectory demonstrates its ability to deliver our forecast 14.5% CAGR EBITDA growth over coming years. Despite this, the company is trading at a ~20% discount to its historic average EBITDA multiple of ~11x, which we believe represents compelling value.
Morgans has an add rating and $3.74 price target on its shares. This implies potential upside of 18% for investors.
