ASX small-caps can be a high upside allocation for an investor's portfolio.
While diversification and long-term principles should still be the fundamental base of a healthy strategy, ASX small-caps can provide increased potential compared to blue-chip stocks.
For investors looking to monitor smaller companies with big potential, brokers have tipped these two options to rise significantly.
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Biome Australia Ltd (ASX: BIO)
Biome Australia develops and commercialises clinically backed innovative live biotherapeutics (probiotics), marketing 18 products under the 'Activated Probiotics' Brand.
As is the case with small-caps, it has experienced plenty of volatility recently.
It was making headlines yesterday after rocketing 20% in a single session after signing a new manufacturing agreement.
In a new report from Bell Potter, the broker has predicted this rise can continue in the next 12 months.
The broker has a $1.00 price target on this ASX small-cap, indicating a massive 270% upside from current levels.
In the report, Bell Potter highlighted that Biome Australia has announced an initiative to derisk and diversify its supply chain. The company is doing this by introducing contract manufacturing in its home market of Australia of assembly and packaging of its Activated Probiotics range.
The initial two-year term with Specialty Probiotics Australia (SPA) is on an exclusive basis. It is subject to limited carve outs and meeting quality and delivery standards.
Conceptually, this is a positive and material development that should enhance operating leverage and BIO's capacity to plan for growth, which has been impeded to some degree by relying completely on importing finished product. Assuming BIO continues to build its domestic franchise, we can see a path to $100m in Australian sales, with attractive margins.
Imricor Medical Systems Inc (ASX: IMR)
Imricor Medical Systems is a medical device company. It engages in the design, manufacture, and distribution of magnetic resonance imaging (MRI) compatible products for cardiac catheter ablation procedures.
It has also experienced volatility in 2026, but remains up 6% year to date.
The team at Morgans believes this ASX small-cap could be an upside play.
There are multiple near-term catalysts approaching which when achieved will see a share price re-rating. IMR is now well funded to deliver on clinical, regulatory, and commercial objectives. We have updated our model and valuation for the capital raise. Our target price is A$2.61 (was $2.63). We maintain our SPECULATIVE BUY recommendation.
From yesterday's closing price of $1.74, the price target from Morgans indicates a 50% upside for this ASX small-cap.
