Investors looking for small-cap shares with significant growth potential may be interested in the optimistic outlook from Bell Potter on these two stocks.
The broker currently has "buy" recommendations on IPD Group Ltd (ASX: IPG) and IVE Group Ltd (ASX: IGL).
Let's see what it had to say following earnings season results.
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IPD Group
The company is a national distributor and service provider to the Australian electrical market.
Its core focus is power distribution, power monitoring, industrial control, renewables, test and measurement, and services, across power generation, commercial, hospitality, infrastructure, and sports and leisure facilities.
The share price for this small-cap company has fallen approximately 19% over the last year.
However Bell Potter's analysis indicates it may now be a value.
After delivering FY25 results largely in line with expectations, the broker believes it is well positioned to capitalise on improving commercial market opportunities and increasing product demand from the data centre market.
The company's FY25 results outlined resilient performance considering the challenging commercial construction market backdrop according to Bell Potter
Data Centre sales grew 33%, comprising 16% of Group revenue in FY25 (up from 12% in FY24), offsetting weakening sales across CMI Cables (down 10.2% on the pro-forma PcP). Strengthening sales across the Mining, Infrastructure and Water / Waste Water end-markets provided additional support to deliver Group pro-forma revenue growth of 1.2%.
We believe the Commercial construction market has passed an inflection point, with growing opportunities to complement strong momentum in other, growing end-markets like Data Centres. IPG represents a relatively undervalued Industrial exposure with further re-rate potential.
The broker upgraded its target price to $5.00 (previously $4.30).
This indicates an estimated upside of 16.28% from yesterday's closing price of $4.15.
IVE Group
Ive Group Ltd is a diversified print and marketing communications company.
The principal activities of the company include conceptual and creative design across print, mobile and interactive media; catalogues, the printing of magazines, marketing, and corporate communications materials and stationery and multi-channel solutions.
It has risen 28.08% in the last 12 months.
Bell Potter noted the company's FY25 results were in line or slightly below expectations.
Based on this, the broker downgraded its guidance.
We have downgraded our FY26 and FY27 revenue forecasts by 1% in both periods but importantly we still forecast a return to growth in FY26. We have also downgraded our underlying NPAT forecasts by 3% and 1% and in FY26 now forecast $53.4m which is in the guidance range but near the upper end. The downgrades are driven by the adverse timing difference from new leases which is still included in underlying NPAT.
Despite this, the broker still has a "buy" recommendation and price target of $3.10.
This indicates an upside of 19.23% from yesterday's closing price of $2.60.
