Looking for outsized returns? If you are and have a high tolerance for risk, then it could be worth checking out the two small cap ASX shares named below that Morgans is bullish.
Here's what the broker is recommending to clients:
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Aeris Resources Ltd (ASX: AIS)
The first small cap ASX share that could be a buy according to Morgans is copper miner Aeris.
Following a site visit, the broker is feeling positive about the ASX stock and has boosted its valuation. It now has a speculative buy rating and 43 cents price target on its shares. This suggests that upside of 30% is possible between now and this time next year.
Explaining its buy recommendation, Morgans said:
We recently attended a site visit to AIS' Tritton operations following our Cracow site visit in July. Morgans has now visited every operating AIS mine. We have adjusted several assumptions relating to Tritton, primarily pertaining to the commencement of Constellation in FY27, which is expected to deliver higher copper and gold grades as well as greater gold recoveries than initially forecast.
Incorporating our adjustments following our site visit, along with a stronger understanding of the operational outlook, has lifted our valuation. We maintain our SPECULATIVE BUY rating and a price target of A$0.43ps (previously A$0.31ps), with the increase reflecting greater leverage to improvements due to its higher cost profile.
Infragreen Group Ltd (ASX: IFN)
Another small cap ASX share that Morgans is positive on is Infragreen.
It is a relatively new listing on the ASX and describes itself as an innovative and emerging, diversified infrastructure company. It notes that it owns, operates and holds interests in sustainable mid-market infrastructure businesses in Australia and New Zealand.
Morgans is positive on the company and sees plenty of value in its shares at current levels. It has initiated coverage with a buy rating and $1.30 price target, which implies potential upside of almost 20% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
Infragreen Group provides exposure to the sustainability transition through essential service businesses in waste recovery, metal recycling, renewable energy and peaking power. Each business operates in fragmented markets with high regulatory and relationship barriers and supportive industry tailwinds. IFN's near-term growth profile (+15% EBITDA CAGR FY25-28) will be led by strong organic growth in the group's solar panel installation business (FY26F incremental EBITDA +A$4.5m), with the remaining portfolio also solidly contributing (+A$2m).
We expect earnings upside remains from inorganic initiatives in the near term. We initiate coverage with a A$1.30ps price target and BUY rating, reflecting IFN's diversified portfolio assets and active ownership value creation model.
