If you're looking for solid capital gains and trying to sort the wheat from the chaff on the ASX, it's often useful to defer to the experts.
I've had a look through the research reports from the broking houses this week and have selected three companies tipped to deliver outsized gains over the next 12 months.
Let's see who the brokers like.
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Acrow Ltd (ASX: ACF)
Acrow is a construction systems company – think scaffolding, formwork, and the like.
The company recently announced a fully underwritten institutional equity raise to raise $70 million, along with a share purchase plan for another $10 million.
Ord Minnett, in a note to clients over the past week, said the company's goal of paying down debt and restarting its M&A strategy with the $27 million acquisition of Ausgroup and the $25 million acquisition of Preston Superdeck was a positive.
They added:
We view this update positively for a number of reasons: 1) the debt levels of ACF have been an ongoing issue for the company, and the equity raise goes a long way in wrangling the Net Debt/EBITDA multiple to reasonable levels; 2) Ausgroup looks to be a nice bolt-on acquisition, bolstering ACF's presence in North Queensland with industrial access proving to be a solid revenue stream for the group; and 3) Preston Superdeck fills a product gap in ACF's product offering, adding loading platforms to the company's 'one stop-shop' value proposition in the construction services space.
Ord Minnett has a price target of $1.30 on Acrow compared to 93.5 cents currently. If achieved, this would be a 39% return.
Credit Clear Ltd (ASX: CCR)
Morgans has tipped Credit Clear as a company to watch, saying the debt collection business has scope to grow, given its proprietary digital collections platform, which they say is a key differentiator.
The broker said regarding the company:
Since listing in 2020, the group has evolved from a pure-play collections technology business to an increasingly scalable end-to-end contingent collections platform which, in our view, is well positioned to deliver long-term compounding growth both organically and through acquisitive market consolidation.
Morgans said Credit Clear is in a unique position to consolidate the market, which is worth $1.5 billion across Australasia and the UK.
The broker has a price target of 30 cents for the company, compared to 21 cents currently, which would represent a 42.9% return if achieved.
IODM Ltd (ASX: IOD)
Shaw and Partners likes IODM, which is an accounts receivable automation software company.
The broker said a recent deal with TransferMate "materially expands IODM's distribution opportunity across its primary growth region while further strengthening a strategic partnership that has expanded materially over the past 12 months''.
Shaw and Partners said the deal followed the expansion with TransferMate into the US earlier, "reinforcing our view that the relationship is becoming increasingly strategic for both parties''.
Shaw and Partners has a price target of 29 cents for IODM shares, up from 12 cents currently, which would represent a gain of 141.7% if achieved.
