ASX small-cap stocks have greater potential to deliver outsized returns than large-cap stocks.
Due to their size, they have higher growth potential. As they expand, their growth can outpace larger and more established businesses.
However, due to their size there is often limited information available for small cap opportunities. They are typically under-followed by large investment institutions, and rarely feature in the news. As a result, many ASX small-cap companies fly under the radar.
Certain investment institutions and brokers have analysts dedicated to discovering such opportunities. They spend significant time researching their markets and meeting with management to inform their valuations.
This gives dedicated experts such as Macquarie Group Ltd (ASX: MQG) a significant advantage over retail investors.
Fortunately, in its recent SMID-Cap Best Picks July 2025 report, Macquarie named three small-cap stocks it expects to outperform.
All three companies have a market capitalisation of less than $2 billion, which is widely considered to be the definition of a small-cap company on the ASX.
Let's take a look at these three opportunities.
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Bega Cheese Ltd (ASX: BGA)
Bega Cheese has a market capitalisation of around $1.6 billion. Its share price has gained traction recently, rising 20% over the past 12 months.
Macquarie is predicting further upside to come, noting:
Bega has runway to deliver cost-out in its business through: i) site rationalisation; and ii) operational efficiencies, which will drive gross margin improvement. It has a track-record of executing on its strategy, effectively managing costs, and reducing its manufacturing footprint in the last few years.
Macquarie also noted that management has hinted it is open to acquisitions. The broker described this development as "an opportunity for further industry consolidation, and supports improved capacity utilisation across Bega's asset base."
Macquarie currently has a price target of $6.40 on Bega shares.
Qualitas Ltd (ASX: QAL)
Qualitas Ltd has a market capitalisation of around $1.1 billion.
Its shares have rocketed 60% over the past year.
Macquarie said Qualitas is "progressing on its strategy to grow committed FUM and deploy proceeds, benefiting from capital interest in private commercial real estate credit, with its best-in-class platform."
The broker believes its forecast of 18% FY26 EPS growth is attractive, despite the company's strong share price action, which has led to its current trading at 24 times earnings.
Macquarie currently has a price target of $3.73 on Qualitas shares.
Monadelphous Group Ltd (AX: MND)
Monadelphous Group Ltd has a market capitalisation of around $1.9 billion.
Its shares have soared nearly 50% higher over the past year.
Macquarie described the company as a "best-in-class contractor to the resources/energy/infra sectors with market-leading Engineering & Construction (E&C) division and dominant position in Maintenance"
The broker said revenue and earnings growth over the past two years have been driven by a lift in E&C activity with this segment.
Macquarie currently has a price target of $17.40 on Monadelphous Group shares.
