ASX small-cap stocks have the potential to beat the market by a wide margin.
Compared to large-cap stocks, small-cap stocks have higher growth potential. Due to their size, they can grow much more rapidly. On the ASX, a small-cap stock is typically defined as a company with a market capitalisation of less than $2 billion.
It's much easier for an ASX small-cap company with a low market share to double in size than a larger company that's already a market leader.
In a 17 July research note, Macquarie Group Ltd (ASX: MQG) named 3 ASX small-cap companies in the healthcare sector with between 56% and 130% upside.
What are they?
Healius Ltd (ASX: HLS)
Healius provides specialty diagnostic services to Australian consumers and practitioners. It has 3 operating segments: Pathology, Imaging, and Others.
Over the past 5 years, Healius shares have taken a hit, declining 74%.
However, Macquarie is forecasting that the stock can turn around.
In its upcoming results, the broker will look for commentary on base business trends, cost growth/margins, and progress on the T27 strategy.
Macquarie currently has a price target of $1.20 on Healius shares.
At the time of writing, Healius shares are changing hands for $0.77. This suggests 56% upside from here over the next 12 months.
Monash IVF (ASX: MVF)
Monash IVF operates 13 clinics and is Australia's second-largest IVF provider
Two unfortunate incidents have weighed heavily on Monash IVF's share price this year. For the year to date, Monash IVF shares are down 40%.
Macquarie believes it has been oversold. Monash IVF shares have already risen 41% since their 52-week low of $0.54 in April. However, the broker believes they remain undervalued and can rebound significantly.
Macquarie currently has a price target of $1.30 on Monash IVF shares.
At the time of writing, Monash IVF shares are changing hands for $0.76. This suggests 79% upside from here over the next 12 months, including capital growth and dividends.
Monash IVF currently offers an attractive dividend yield of 6.75%.
Polynovo Ltd (ASX: PNV)
PolyNovo develops and commercialises innovative medical devices using its patented NovoSorb technology. NovoSorb is used in the treatment of burns and surgical wounds.
Polynovo shares are down 45% over the past 5 years.
However, Macquarie believes there is material upside from here.
The broker is forecasting 2H25 revenue of $71.7m, and will be looking for management commentary regarding its BARDA trial and performance of its new MTX product when it releases its upcoming results.
Macquarie currently has a price target of $2.80 on Polynovo shares. At the time of writing, Polonovo shares are changing hands for $1.22, suggesting a 130% upside over the next 12 months.
