If you are looking for investment ideas, then it could pay to listen to what Bell Potter is saying.
That's because the broker has just released its latest top Australian picks from the smaller size of the market. These are its panel of favoured small cap Australian equities that it believes offer attractive returns over the long term.
Two that make the list in November are named below. Here's why it is bullish on them:
DroneShield Ltd (ASX: DRO)
This counter drone technology company's shares make the list again in November.
Bell Potter believes DroneShield is well-positioned for growth thanks to the significant increase in defence budgets globally and trends in global warfare.
Commenting on the company, the broker said:
DroneShield is an Australian defence manufacturer specialising in counter drone technology. DRO provides an end-to-end counter-drone solution that integrates proprietary artificial intelligence software with a suite of hardware products utilised to detect, identify and defeat aerial, ground and maritime threats. The company's products are largely in-house technology and include handheld, vehicular and fixed installations. DRO's customers primarily include military and intelligence, as well as law enforcement, critical infrastructure and commercial parties globally.
Bell Potter has a buy rating and $5.30 price target on its shares. This implies potential upside of almost 60% for investors over the next 12 months.
Praemium Ltd (ASX: PPS)
Another ASX share that makes the list in November is Praemium. It is a financial technology company that operates an investment platform offering alongside a branded online portfolio administration service.
The broker feels that its shares are undervalued relative to industry peers at 20x forward earnings. Especially given its positive growth outlook, which is being underpinned by market share gains and funds under administration (FUA) growth. It said:
Today, PPS manages +$60bn in custodial and non-custodial FUA. While Praemium has demonstrated commercial momentum, strong growth capacity, and a leading technology offering, its valuation continues to lag key peers. This stock looks very attractive at a 12MF PE of ~20x, and we expect the market to catch on as the company executes on further market share gains and FUA growth.
Bell Potter currently has a buy rating and $1.05 price target on its shares. Based on its current share price of 87 cents, this suggests that upside of 20% is possible for investors between now and this time next year.
