The S&P/ASX Small Ordinaries Index (ASX: XSO) is up 5% in the year to date (YTD) and up 10% over the past 12 months.
Meanwhile, the S&P/ASX All Ordinaries Index (ASX: XAO) has risen 4% in the YTD and is also 10% higher over the past year.
The interest rate-cutting cycle that has begun in the US, Australia, and many other nations is a tailwind for ASX small-cap shares.
This is because small-caps are typically young companies carrying more debt than larger companies to fund their early growth.
In this article, we reveal 3 ASX small-cap shares that have caught the eye of analysts.
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Experts give buy ratings to 3 ASX small-cap shares
Arthur Garipoli of Seneca Financial Solutions has a buy rating on the following two ASX small-cap shares.
MTM Critical Metals (ASX: MTM)
MTM Critical Minerals is an e-scrap recycling company that extracts metal, such as gold, copper and tin, from discarded electronics.
Garipoli says this ASX small-cap share is more suited to higher-risk investors.
He explains this buy rating (courtesy The Bull):
MTM's flash joule heating technology is proven, with commercial production targeted for 2026.
The company has locked in two supply agreements totalling 1100 tonnes per annum of e-scrap.
MTM recently secured firm commitments to raise $50 million from institutional investors.
The company may re-rate on potential catalysts that include offtake agreements and completing the demonstration plant.
The MTM Critical Metals share price is up 175% in the YTD and up an astounding 1,687% over the past 12 months.
XRF Scientific (ASX: XRF)
XRF Scientific is a service provider in the mining industry. It makes equipment and chemicals used in preparing samples for analysis.
Garipoli says this ASX small-cap share remains "under the radar" due to its market capitalisation (which is $258 million).
He comments:
XRF holds a strong competitive position and operates a recurring revenue business model.
The company has generated profit growth in the past five years.
A weaker share price followed a 9 per cent fall in revenue in the March quarter of fiscal year 2025 when compared to the prior corresponding period.
However, profit before tax rose 5 per cent, creating a buying opportunity, in our view.
The XRF Scientific share price is down 8% in the YTD and up 31% over the past 12 months.
But wait, there's more…
Stuart Bromley of Medallion Financial Group has been watching another ASX small-cap share that he considers promising.
Southern Cross Electrical Engineering (ASX: SXE)
Southern Cross Electrical Engineering provides electrical, instrumentation, security, fire, communications, and maintenance services.
The company recently bought Force Fire Holdings for an initial payment of $36.3 million and a total consideration of $53.5 million.
Southern Cross Electrical Engineering funded the purchase with its cash reserves.
Bromley told The Bull:
The acquisition will enhance the company's service offerings in the fire safety space.
The project pipeline remains strong after recently announcing it had been awarded projects of $70 million, including the Western Sydney Airport stand-alone facilities project and a hyperscale data centre, also in Western Sydney.
Southern Cross Electrical Engineering shares are up 16% in the YTD and up 6% over the past 12 months.
