The obscure ASX share with 45% upside one small-caps expert is backing right now

Here's a stock you've never heard of, but is headed to the top.

| More on:
Kid on a skateboard with cardboard wings soars along the road.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's no doubt small-cap ASX shares can fly high in a hurry unlike anything their larger rivals are likely to do.

But nothing comes for free, and this type of explosive growth won't just fall into an investor's lap.

Picking the right small-cap stock requires much research of businesses where information might be pretty scarce.

And because many of them are in pre-profit or even pre-revenue stages, financial fundamentals might not even necessarily reflect their future potential.

It's indeed an imprecise art.

However, there are professional investors that study small caps for a living. Listening to their favourite picks and the rationale behind them might provide some insight for your own decisions.

One of those pros is Salter Brothers portfolio manager Gregg Taylor. This week, he named one ASX stock with a bright outlook that investors may not know much about:

Dirt cheap for 'defensive growth'

Acrow Formwork and Construction Srvc Ltd (ASX: ACF) provides services and formwork solutions for the civil construction industry.

Those in the know have flocked to the stock, seeing the share price rocket more than 39% over the past year.

Created with Highcharts 11.4.3Acrow PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Taylor's team reckons there's still upside in excess of 45% above the current share price over the next couple of years.

The business is "consistently growing" its revenue and earnings, as seen over the five years that it's been listed on the ASX.

"It's also generating good cash, has a good balance sheet, is quite profitable and is dividend-paying — fully franked yield of close to 6%."

Despite the rise in share price, Acrow shares are still trading at a price-to-earnings multiple of seven to eight times, which is a bargain in Taylor's eyes.

"So you're not paying a lot for that defensive growth."

Should you invest $1,000 in Fineos Corporation right now?

Before you buy Fineos Corporation shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Fineos Corporation wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended MedAdvisor. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

ASX shares Business man marking buy on board and underlining it
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Broker Notes

These ASX 200 shares could rise 10% to 40%

Analysts are tipping these shares to deliver big returns over the next 12 months.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Broker Notes

Down 26%! Buy this ASX 200 stock while it's dirt cheap

Bell Potter thinks this blue chip has been oversold and is in the buy zone now.

Read more »

Rising share price chart.
Broker Notes

Morgans says these top ASX stocks could rise 15% to 20%

The broker thinks these shares could be heading higher from here.

Read more »

Man in mining hat with fists raised and eyes closed looking happy and excited about the Newcrest share price
Broker Notes

'Gamechanger': Top broker says this ASX mining share can rise over 100%

Big returns could be on the cards for buyers of this speculative mining stock according to Bell Potter.

Read more »

group of friends checking facebook on their smartphones
Broker Notes

How much could $5,000 invested in Telstra shares become in a year?

Do analysts think this telco giant could deliver good returns for investors?

Read more »