The ASX small-cap stock end of the market is an under-researched segment of businesses that have a lot of growth potential but probably aren't valued highly enough for how much they could scale in the coming years.
The listed investment company (LIC) WAM Microcap Ltd (ASX: WMI) aims to look for the "most exciting undervalued growth opportunities in the Australian micro-cap market".
Of course, there's no guarantee that a small business will become a medium-sized one. But, I'd say it's easier for a small company to grow by 10% than it is for a $100 billion business.
Let's take a look at two ASX small-cap stocks that WAM highlighted in the WAM Microcap portfolio.
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Qoria Ltd (ASX: QOR)
WAM describes Qoria, previously called Family Zone, as a business that develops cloud-based cybersecurity and child protection software for schools and families worldwide.
The Qoria share price jumped 20% in July thanks to its financial performance and strategic developments, according to the fund manager.
WAM noted the ASX small-cap stock reported growth of $29 million of annual recurring revenue (ARR) in the three months to 30 June 2025, meaning a 55% increase compared to the fourth quarter of FY24, assisting the 25% rise in total ARR to $145 million in the year.
The fund manager highlighted that Qoria's management increased FY26 guidance to 20% ARR growth, signalling "confidence in the ongoing expansion and market adoption of its cyber safety platform which provides strong visibility into future year revenues and operating leverage."
Plenti Group Ltd (ASX: PLT)
The other ASX small-cap stock that WAM pointed out was Plenti, a fintech platform that provides consumer and renewable energy loans digitally across personal, automotive, and sustainability lending.
This business recently reported a record quarter in the three months to 30 June 2025, with loan originations reaching $437 million, which represented a 44% increase year over year. The loan portfolio is close to $2.7 billion, a rise of 21% year over year.
The fund manager pointed out that Plenti has secured the management of the government-backed Western Australia residential battery scheme, an initiative that will "open new revenue channels and likely generate a steady stream of income through financing and rebate administration fees", according to the investment team.
WAM said the rapid development of a technology solution "showcased operational and technological capabilities, reinforcing the company's leadership in clean energy finance."
The fund manager noted that Plenti's automotive loan partnership with National Australia Bank Ltd (ASX: NAB) saw the daily origination rise by 110% on the prior quarter, showing ongoing success working with a major bank.
WAM believes rate cuts will provide further tailwinds. Yesterday, the RBA cut the cash rate by 25 basis points (0.25%) to 3.60%.
