If you have a high tolerance for risk, then it could be worth hearing about the ASX defence stock that Bell Potter is tipping as a buy.
This is especially the case given that the broker believes it could more than double in value over the next 12 months.
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Which ASX defence stock?
The stock that Bell Potter is recommending to clients is Titomic Ltd (ASX: TTT).
It is a cold spray metal coating technology company specialising in additive manufacturing and coating and repairs.
Bell Potter highlights that cold spray uses compressed gas to accelerate metal powders to supersonic speeds. This enables kinetic energy to fuse/plastically deform the particles onto a substrate in solid form.
In addition, the company's high pressure systems can accept speciality alloy powders and manufacture large high-spec components. This means that key target markets are the global aerospace and defence sectors, and the natural resources and energy sectors.
What is the broker saying?
Bell Potter was at the ASX defence stock's investor day in the US recently and was impressed with what it saw. It said:
The event highlighted TTT's unique additive manufacturing and coating and repairs capabilities, and leverage to US and global defence spending. From the Strategic Advisory Group, it was clear that US aerospace and defence activity is at an inflection point as the country develops hypersonic systems, addresses supply chain vulnerabilities, and updates an ageing installed asset base. TTT is enjoying the tailwinds of a significant culture-change and increased sense of urgency across the US Department of War and broader Washington bureaucratic system.
The broker also notes that 2027 could be the year that production really starts to kick off. It explains:
Last year, TTT established US-based capabilities for technical validation and to service defence prime qualification activities in 2026. TTT is now engaged with NASA and several tier one defence prime contractors for qualification and is progressing other critical industry certifications (AS9100, DNV maritime approval). By the end of 2026, TTT expect to convert from qualification phase to initial production, which should rapidly scale from 2027. The company also expects that non-dilutionary funding opportunities will crystalise this year.
Big potential returns
According to the note, Bell Potter has retained its speculative buy rating and 50 cents price target on the ASX defence stock.
Based on its current share price of 21.5 cents, this implies potential upside of 130% for investors over the next 12 months.
Commenting on its recommendation, the broker said:
TTT provides leverage to the emerging application of its cold spray technology in Additive Manufacturing (AM) for defence, aerospace and natural resources markets. US defence spending as a percentage of GDP is growing off a cyclical low and is largely being driven by modernisation of its defence industrial base. TTT's TKF technology has several advantages over traditional casting and forging manufacturing process including shorter lead-times and production cycles and improved material properties.
