While a fundamental portfolio features strong diversification with a long-term focus, some investors may also choose to add exposure to ASX small-caps.
These types of companies often have stronger growth prospects than well established blue-chip shares.
While ASX small-caps can experience heightened volatility, here are two that have drawn attention from experts recently.
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The Environmental Group Ltd (ASX: EGL)
The Environmental Group engages in designing, application and servicing of gas and vapour emission control systems, inlet and exhaust systems for gas turbines, water purification and engineering services.
It operates through the following three segments: Products, Services and the Corporate segment.
Yesterday, the company released 1H FY26 results which included:
- Revenue up 8.6% on prior comparable period
- Underlying EBITDA up 25.9% on pcp
- Gross profit up 21.7% from pcp.
Investors were clearly disappointed with the result, as the share price tumbled 15.69% following the release.
Following the results, the team at Bell Potter issued updated its guidance on this ASX small-cap.
It seems that after yesterday's sell-off, the small-cap could be undervalued.
The broker reiterated its buy recommendation, but slightly lowered its price target to $0.350.
From yesterday's closing price of $0.22, this still indicates an upside of 59%.
The broker said:
Although EGL's first half was below expectations, we remain confident in its outlook. We believe EGL will reap the benefits of its growth initiatives which created temporary inefficiencies during the half. EGL's growing recurring and diversified revenue stream drives a forecasted EPS CAGR of +19% over the next 3 years. We retain our Buy recommendation.
Meeka Metals Ltd (ASX: MEK)
Meeka Metals is another ASX small-cap stock that has been drawing positive attention from brokers.
It is a gold and rare earths company with a portfolio of high-quality 100% owned projects across Western Australia.
It has risen 60% over the past year, however it has slumped 20% since the start of 2026.
This ASX small-cap also closed trading yesterday at $0.22.
However a recent share price target from Morgans indicates it is well below fair value.
The broker has a buy rating and price target of $0.33 on this ASX small-cap stock.
That indicates an upside of 50%.
The confidence out of the broker is on the back of recent earnings results from the gold miner.
The broker said:
MEK delivered its 2Q26 operating result as the Murchison Gold Project continues to ramp up. Gold production increased 28% quarter on quarter to 9.1koz Au and was in-line with MorgansF of 9.3koz Au. Ounce production was underpinned by a mill head grade of 3.3g/t Au, ~10% above MorgansF assumptions; however, this grade outperformance is partially offsetting lower-than-expected throughput.
