While small-cap stocks come with increased volatility compared to blue-chip holdings, there can also be increased upside.
Fresh analysis from Bell Potter has identified two ASX small-cap stocks that have plenty of potential in 2026.
Let's see what is behind the optimism.
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Black Pearl Group Ltd (ASX: BPG)
Blackpearl Group is a data technology platform that develops and operates a lead prospecting and marketing product suite via its proprietary Pearl Engine platform and augmented large language model developed by BPG in 2022.
The company transforms anonymous, unstructured web visits and data layers into identifiable prospects to significantly increase efficacy for SME ad/marketing spend by targeting prospects with a high intent to buy.
The company was only first listed on the ASX late last year.
It jumped 5% yesterday, however it is down roughly 20% since its initial listing and is currently trading for 68 cents.
Bell Potter is bullish this small-cap stock can rise.
In a report yesterday, the broker said Black Pearl Group is set to release its 4Q26 update next week on Tuesday.
We forecast +22% QoQ/+103% YoY growth in exit ARR to $25.3m, which would represent +$1.6m QoQ and +$12.8m growth YoY.
Bell Potter has retained its speculative buy recommendation, but reduced its price target to $1.76 (previously $1.91).
From yesterday's closing price, the updated target still indicates a potential upside of 160%.
Kinatico Ltd (ASX: KYP)
The second small-cap stock drawing a positive recommendation is Kinatico.
It is a technology company that helps employers manage their workforce and meet regulatory compliance needs. It operates an online screening and verification service.
It has been under heavy selling pressure this year, falling almost 58%.
This includes a 10% drop yesterday.
Recently, the company provided a Q3 update.
Bell Potter said SaaS revenue increased by 28% year-on-year and 5% quarter-on-quarter to $5.2 million, in line with expectations.
Total revenue rose 5% year-on-year but declined 1% quarter-on-quarter to $8.5 million, slightly below the Bell Potter forecast of $8.9 million.
EBITDA came in at $1.3 million, also marginally below the BPe estimate of $1.4 million.
We have downgraded our revenue forecasts by b/w 3-4% in each of FY26, FY27 and FY28 due predominantly to the current macro environment and the impact this is having on hiring (which impacts the legacy business) and sales cycles (which impacts the SaaS business).
Based on this guidance, Bell Potter has reduced its 12 month price target to 36 cents (previously 38 cents).
However, from yesterday's closing price, this still indicates an upside potential of 166%.
