Small-cap stocks typically have a market capitalisation ranging from a few hundred million to $2 billion.
These stocks come with big upside. Many of the large-cap stocks today started their ASX life as a small-cap many years ago.
One example is CSL Ltd (ASX: CSL). This stock was worth $5 a share back in the early 2000s, and now trades for around $270.00 per share.
However, with this upside also comes heightened risk.
Small-cap stocks often carry elevated risk because many are in early growth or development stages and may not yet be generating consistent profits, meaning their valuations rely heavily on future earnings that may never materialise.
With that risk in mind, here are 2 ASX small-cap stocks with growth potential.
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Santana Minerals Ltd (ASX: SMI)
Santana Minerals is focused on precious metal exploration focusing on the Bendigo-Ophir Project in New Zealand. Its projects include the Cuitaboca Project in Mexico and Cambodian Project. It has two operating segments Mexico and New Zealand.
This small-cap stock has already risen by more than 30% YTD.
SMI recently released an updated Pre-Feasibility Study for its 100%-owned Bendigo-Ophir Gold Project in New Zealand, based on a new resource and higher-grade reserve.
Broker Bell Potter said fast track approvals legislation in NZ could see the project fully permitted by end-CY25.
We still see the best value opportunities in the developers and explorers.
SMI have clear pathways through permitting and towards production. In a very active M&A market they also present as attractive targets for cashed up producers with well-priced equity looking to grow their production bases.
Based on this information, the broker has a speculative buy recommendation on the company with a price target of $1.30.
This would mean the share price is set to double from its current price of $0.605.
SiteMinder Ltd (ASX: SDR)
SiteMinder is a technology company that provides an e-commerce platform for hotels and other accommodation businesses. The company touts its product as helping hotels to sell, market, manage, and grow their businesses from one platform.
SiteMinder offers integrations with hotel property management systems and third parties such as online travel agencies, tour operators, and global travel distributors.
The company continues to invest in user-friendly features for its growing subscriber base.
Its share price has fallen more than 12% since January, and I believe it's now a value.
Broker Bell Potter agrees, placing a "buy" recommendation and price target of $6.05 on the stock.
This indicates more than 16% upside from here.
The broker believes the company has a narrow-moat but is a future category leader in hotel e-commerce software. The broker also said this isn't reflected in the current share price.
Macquarie also has an attractive price target of $6.09 on SiteMinder shares, saying last month that rapid growth could come in the short term.
