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If you are looking for investment ideas, then it could pay to listen to what Bell Potter is saying.
That’s because the broker has just released its latest top Australian picks from the smaller size of the market. These are its panel of favoured small cap Australian equities that it believes offer attractive returns over the long term.
Two that make the list in October are named below. Here’s why it is bullish on them:
A new addition to its panel is smash repairer AMA Group. The broker thinks that the smash repairer is well-positioned for a turnaround after a tough period.
It also sees opportunities for the company to grow through consolidation in a highly fragmented industry. Especially with its balance sheet expected to be in a net cash position next year. Bell Potter commented:
We see AMA positioned for a turnaround, with the FY25 result showing strength in the core business and runway for margin expansion. AMA is the largest player in the accident repair market, with a 13% share, and is well positioned to lead consolidation in what is a highly fragmented industry. The company has cleaned up the balance sheet after several equity raisings and is expected to enter a net cash position by 2026, providing the capital flexibility for M&A optionality.
Commentary from management has been indicative that the company is actively considering inorganic expansion, and we believe further announcements on this would act as a catalyst for the stock. Situational headwinds from COVID-related labour shortages are now easing, and we see AMA continuing to benefit as repair volumes normalise and international borders reopen to skilled workers. We see potential for upgrades to FY26 guidance, most likely at the half or third quarter update.
DroneShield Ltd (ASX: DRO)
This counter drone technology company makes the list again in October.
Bell Potter likes the growing ASX share due to its strong position in a booming industry. Commenting on the company, the broker said:
DroneShield is an Australian defence manufacturer specialising in counter-drone technology. DRO provides an end-to-end counter-drone solution that integrates proprietary artificial intelligence software with a suite of hardware products utilised to detect, identify and defeat aerial, ground and maritime threats.
The company’s products are largely in-house technology and include handheld, vehicular and fixed installations. DRO’s customers primarily include military and intelligence, as well as law enforcement, critical infrastructure and commercial parties globally.