If you have a high tolerance for risk, then it could be worth checking out the ASX penny stock in this article.
That's because the team at Bell Potter believes its shares could rocket over the remainder of 2026.
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Which ASX penny stock?
The penny stock that Bell Potter is tipping as a (speculative) buy is Bubs Australia Ltd (ASX: BUB).
It is a small rival to infant formula manufacturer A2 Milk Company Ltd (ASX: A2M), with a focus on goat's milk.
Bell Potter notes that the ASX penny stock has released its quarterly update and revealed revenue largely in line with expectations thanks to strong growth in the United States. It said:
2Q26 Net revenue of $29.9m was up +4% YoY (and vs. BPe of $30.2m and 1Q26 of $25.6m). US IMF growth was +46% YoY to $17.4m and the main driver of revenue growth. T12M Revenue was up +23% YoY to $109.5m a figure broadly comparable to 1Q26. 1H25 Revenues are essentially in line with our forecasts at $55.5m and BUB noted a 1H26 GM of 49.3%, which is above the 40-45% FY26e guidance range and implies a 2Q26 GM of 51.8%.
The broker also points out that there were no comments from management relating to its outlook, but it expects solid growth to continue, setting it up for a decent FY 2027. It adds:
There are no firm outlook comments. We note that BUB has previously provided FY26e guidance of: (1) FY26e revenue of $120-125m, implying a 2H26e annualised run rate of $129-139m (vs. BPe FY27e of $135m); (2) Gross margin target of 40-45% (1Q26 46.4% and 2Q26 of 51.8%) and reported EBITDA of $1-2m.
However, a lot of this will depend on its approval process in the US, where it is seeking permanent access. It adds:
BUB continues to progress with its USFDA application for permanent access. The USFDA has confirmed that it will continue to facilitate the importation, sale, and distribution of BUB product while its review is being finalised.
Big potential returns
According to the note, the broker has responded to the update by upgrading the ASX penny stock to a speculative buy rating with an improved price target of 18 cents.
Based on its current share price of 12.7 cents, this implies potential upside of 42% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We upgrade to Buy, Speculative risk rating (prev. Hold, Speculative rating). 2Q26 revenue growth was consistent with our expectations, although 1H26e gross margins were stronger. USFDA remains the largest risk factor, however, we suspect the delays are more linked to 2025 shutdowns than BUB product. New management look to be increasing brand support, resulting in what looks a more consistent US revenue profile. FY26e margin risk looks to the upside following a strong 1H26 outcome.
