These small cap ASX shares could rise 10% to 40%

If you aren't averse to investing at the smaller side of the market, then it could be worth looking at the shares named below.

That's because the team at Morgans has just given these small cap ASX shares buy ratings. Here's what it is saying about them:

Accent Group Ltd (ASX: AX1)

While this footwear focused retailer has been doing it tough recently, Morgans was pleased to see that FY 2026 has started positively.

In light of this, the broker believes that there is value in its shares at current levels and has upgraded them to a buy rating with a $1.65 price target. This implies potential upside of approximately 11%. It said:

AX1's FY25 result was at the upper end of guidance with EBIT largely flat on the pcp. Sales turned negative in the 2H, and gross margins were weak driven by the highly promotional environment. Sales in the first 7 weeks of FY26 have turned positive and AX1 has provided guidance for FY26, expecting high single digit EBIT growth. AX1 plans to open 30 stores and 4 Sports Direct Stores, the first one opening in November in Melbourne. We have lowered our EBIT FY26 by 2%, with FY27 EBIT largely unchanged. This has been driven by lower store openings, higher gross margins, offset by lower costs. Our valuation reduces to $1.65 (from $1.85). We have upgraded to a BUY.

Monash IVF Group Ltd (ASX: MVF)

Another small cap ASX share that could be worth considering is embattled fertility treatment company Monash IVF.

The broker thinks that it is a long-term thematic play and a medium-term turnaround opportunity. However, it classes it as a speculative buy with a 96 cents price target, so it may only be suitable for investors with a high risk tolerance. This price target suggests that upside of 40% is possible from current levels. It said:

MVF delivered a FY25 result with revenue and EBITDA slightly ahead of expectations, offset by higher depreciation and interest, while underlying NPAT of A$27.4m landed in line with guidance. However, FY26 guidance was well below expectations with a weak 2H25 exit rate expected to continue into 1H26 combined with cost pressures and one-offs following independent review recommendation implementations. As it stands, MVF remains a long-term thematic play with a medium-term turnaround opportunity with strong structural growth drivers still firmly intact. We have revised down our short-term forecasts and set our target price at $A0.96 (was A$1.00). We maintain a SPECULATIVE BUY recommendation.

VEEM Ltd (ASX: VEE)

Finally, this marine, defence and mining industries products company could also be a small cap ASX share to buy according to the broker.

Morgans likes Veem due largely to the potential of its defence business. It has put a buy rating and $1.30 price target on its shares. This implies potential upside of 16% for investors. Morgans said:

VEE has made two significant announcements related to its Defence business over the past week: 1) Renewed contract with Australian Submarine Corp (ASC) for a further 6 years, valued at $65m; and 2) Received approved supplier status for the Huntington Ingalls Industries Newport News Shipbuilding (HII-NNS) Australian Submarine Supplier Qualification (AUSSQ) program that will allow VEE to enter the US submarine shipbuilding supply chain. We see these developments as positive for VEE's future growth potential in the Defence sector. […]

We continue to believe in VEE's long-term growth potential, supported by sizeable addressable markets in propellers (US$2.7bn) and gyros (US$14.6bn), as well as an increasingly positive outlook in Defence – a sector VEE has served since 1988.