Looking to buy a few ASX small-cap shares to potentially help turbocharge your portfolio returns in 2025?
Then Lucas Goode, a portfolio manager for the IML Australian Smaller Companies Fund, has three companies you may wish to run your slide rule over. The fund delivered an annual return of 20.0% after fees as at 31 December.
Goode said the three ASX small-cap shares, which are each top 10 holdings in his fund, are all well positioned to continue to perform well in 2025.
"They have strong competitive positions, are capably run and have a solid growth outlook. All are relatively resilient to changes in the economic cycle and leveraged to long term structural tailwinds. And crucially, all are reasonably priced," he said.
Which stocks is he talking about?
Read on!
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ASX small-cap share accelerating organic growth
First, we have global billing software provider Hansen Technologies Ltd (ASX: HSN).
The Hansen Technologies share price is up 6% in a year, with shares having surged 32% over the past six months. And 2025 could see the ASX small-cap share continue to charge higher.
According to Goode:
Hansen Technologies is a global provider of billing and customer care software to the energy and communications sectors. The increasingly dynamic nature of energy markets is driving higher demand for Hansen's energy products.
Organic revenue growth in Hansen's Energy & Utilities business was 15% in FY24, well above its historic mid-single digit growth rate as customer uptake of Hansen's newer cloud native solutions accelerates.
Hansen Technologies' growth outlook could also benefit from its recent strategic acquisition.
"The company recently entered Europe's largest energy market with the acquisition of German business Powercloud," Goode noted.
Goode added:
Hansen is well positioned to demonstrate accelerating organic growth and expanding margins in the next two years, driven by improving profitability at Powercloud, growing energy utility technology requirements and potential success in large tenders within its Communications segment. Trading on 15x FY26 free cash flow with a strong balance sheet, we see ample scope for a re-rating.
Supplying growing naval demands
The second ASX small-cap share Goode has a bullish outlook on is naval shipbuilder Austal Ltd (ASX: ASB). The Austal share price is up 92% since this time last year, with more potential gains ahead.
Noting the surge in global military spending over the past three years, Goode said, "A clear beneficiary of increased military expenditure is naval shipbuilder Austal."
In its United States business, Goode said:
Austal's modern and low-cost shipyard in Alabama is a crucial part of the United States' military industrial base, something that was highlighted last year when the company was granted US$450 million to build dedicated facilities for the construction of nuclear submarine modules under the AUKUS program.
As for its Australian business, Goode added:
Austal has effectively been appointed as the Australian Navy's single source shipbuilder under the Strategic Shipbuilding Agreement (SSA).
Combined with its record AU$13 billion order book (excluding the SSA), Austal's shipyards in both Alabama and Western Australia (as well as its San Diego support facility) are likely to be fully utilised well into the 2030s.
But Goode said the market is not yet pricing this growth outlook in for the ASX small-cap share. He noted:
Despite its strong outlook, Austal is currently trading at a material discount to net tangible assets. We believe that the market vastly underestimates both Austal's strategic importance to the US and Australian governments, and its earnings power as its record order book is converted into revenue.
ASX small-cap share tapping into Medicare growth
Rounding off with the third ASX small-cap share Goode believes has a solid growth outlook for 2025, we have radiology provider Integral Diagnostics Ltd (ASX: IDX). The Integral Diagnostics share price has soared 52% over the last 12 months.
With Australia's ageing population in mind, Goode said, "Integral Diagnostics, after its recent merger with Capitol Health, is the second largest radiology provider in Australia. "Medicare funded radiology volumes have grown at a +4% compound annual growth rate over the past 15 years, a rate well ahead of population growth."
Adding that Medicare benefits in radiology have increased by almost 150% over the past 14 years, Goode concluded:
IDX's investment in technology and strategic M&A sees it well placed to benefit from growth in the sector. The company's merger with Capitol should yield significant operational benefits, while a strong balance sheet provides scope for further accretive acquisitions.
