If you have a high tolerance for risk, then it could be worth checking out the small-cap ASX share in this article.
That's because if the team at Bell Potter is on the money with its recommendation, it could deliver explosive returns over the next 12 months.
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Which small-cap ASX share?
The small cap that Bell Potter is recommending to clients is Bubs Australia Ltd (ASX: BUB).
It is an early-stage fast-moving consumer goods (FMCG) company with exposure to growing demand for premium foreign sourced infant formula (IMF) products in China and the United States.
Bell Potter notes that Bubs recently held its investor day event and was pleased with what it heard. It explains:
In a short span of time BUB has secured 1.3% share of the US IMF market, with a 9% share in the premium natural segment (a category that grew +44% YoY in 2025). Increasing access to product is a key driver of growth with store exposures grown +27% in 1H26 to 5,558 and an expansion to 8,891 targeted by end FY26. The USFDA approval process for permanent market access is ongoing.
Targeting entry into Vietnam, Canada and Mexico, markets with a combined value of A$3.4Bn and growing at an aggregated forecast rate of ~10% p.a. Replicating some of the success seen in Australia and the US (share of 5.1% and 1.3%, respectively) implies a reasonable level of upside if successful.
Bell Potter was also pleased to see that the small-cap ASX stock has reaffirmed its guidance for FY 2026. This will see revenue of $120 million to $125 million, which is up from $104.5 million in FY 2025.
Big potential returns
According to the note, the broker has retained its speculative buy rating and 18 cents price target on the small-cap ASX stock.
Based on its current share price of 11 cents, this implies potential upside of 64% for investors over the next 12 months.
Bell Potter is bullish on the company due to its belief that FY 2026 will be a transformational year. It explains:
FY26e is a transformational year for BUB, with reported EBITDA projected at $4-6m despite incurring $5m in air freight and tariff related expenses, some of which will dissipate in FY27e. In the near term a +59% expansion in ranging points in the US and market realignment of China IMF channels towards English label formats should support a stronger 2H26e sales outcome.
With the US the primary growth engine of the business, gaining permanent access, is likely to prove a de-risking event from a value standpoint. In the interim, recent quarterly reporting saw BUB continue to materially outperform its US IMF peer group in growth (up +32% YoY in 2Q26 in USD terms vs. sector peer weighted revenue growth of -7% YoY).
