For investors with a high risk tolerance, small cap ASX shares can offer exciting growth opportunities. Three such stocks have recently been rated as buys by leading analysts, with potential for significant returns. Below, we explore the companies and what brokers are saying about their growth prospects.
IPD Group Ltd (ASX: IPG)
IPD Group Ltd. is a prominent distributor of electrical equipment and industrial digital technologies. This company has earned a buy rating from Bell Potter, a well-respected brokerage firm, which has set a price target of $6.00 for its shares.
Bell Potter believes that IPD Group is well-positioned to benefit from the ongoing shift towards electrification in various industries. The broker highlighted the company’s ability to capture growth across multiple end markets, stating: "We continue to view IPD as one of the most attractive ways to play electrification across multiple sectors. The stock remains a top pick among our industrial coverage."
With the global push for clean energy and the electrification of transport, homes, and industries, IPD Group stands to benefit greatly. Investors looking for exposure to industrial technology and infrastructure should keep an eye on this stock, as analysts are confident in its growth potential.
OncoSil Medical (ASX: OSL)
OncoSil Medical is a small cap ASX share that analysts are calling a buy due to its innovative approach in the healthcare sector, particularly in the treatment of locally advanced unresectable pancreatic cancer. The company is commercialising its OncoSil device, a single-use brachytherapy device designed to deliver beta radiation directly into cancerous tissue, used in combination with chemotherapy.
OncoSil Medical targets locally advanced unresectable pancreatic cancer (LAPC), which means the cancer has not spread extensively but is too close to critical blood vessels to be removed surgically. The goal of treatment is to reduce tumour size, making surgical removal possible for some patients.
Pancreatic cancer is one of the most difficult cancers to treat, and existing options are limited. OncoSil Medical offers a ray of hope, and the global pancreatic cancer treatment market is expected to grow significantly in the coming years. Analysts believe that the development of next-generation therapies, like OncoSil, will play a pivotal role in this growth.
A key advantage of the OncoSil device is its potential to improve outcomes for pancreatic cancer patients. Many experts view it as a promising option in a field where survival rates remain stubbornly low. Commenting on the broader market, an analyst noted: “The survival of 80% of patients has been extended by new drug therapies and combinations. Pancreatic cancer treatment is advancing through innovations in surgery, chemotherapy, and radiation therapies, and new technologies like OncoSil™ could be game-changers.”
OncoSil Medical, while high risk due to the nature of its business, could offer substantial upside for investors as it continues to penetrate the global cancer market.
Adairs Ltd (ASX: ADH)
The next small cap ASX share analysts are recommending this month is Adairs Ltd. This retailer specialises in homewares and furniture, and has been rated as an "add" by analysts at Morgans. With a target price of $2.20 per share, the broker believes Adairs offers a solid income opportunity with the potential for capital gains.
Adairs’ FY25 has started off slower than anticipated, with a 7% decline in sales compared to the previous year. However, Morgans remains optimistic about the company’s outlook, citing strong cost control measures that helped mitigate the impact on earnings. The broker expects sales to improve as the year progresses and anticipates positive earnings growth by year’s end. Morgans commented: “If Adairs can achieve a better sales outcome while maintaining good discipline over pricing and operating costs, FY25 should be a year of positive earnings growth.”
Adairs also offers an attractive dividend yield of 7%, making it an appealing choice for income-focused investors. Even though the retail industry is facing some immediate difficulties, Morgans believes that a turnaround is possible, one that will be fueled by both operational enhancements and a rise in consumer spending.
For investors seeking small cap opportunities with strong growth potential, IPD Group, OncoSil Medical, and Adairs are three ASX shares to consider. IPD Group is well-positioned to benefit from electrification trends, OncoSil Medical is making strides in the critical area of locally advanced pancreatic cancer treatment, and Adairs offers both income and recovery potential in the retail space. However, these stocks come with a degree of risk, and investors should be mindful of the volatility that often accompanies small cap investments. Nonetheless, analysts are optimistic about their prospects, and each company presents unique opportunities for growth in the coming months.
