ASX small-cap shares don’t get a lot of attention, but they could be among the best investment opportunities given how much they could grow.
Small businesses are usually much earlier on with their growth journeys than ASX blue-chip shares. This means the shares could have a lot of capital growth potential ahead, which is obviously compelling.
But, on top of that, many ASX small-cap shares aren’t priced for how much growth they could achieve in the long term. In other words, they can be significantly undervalued for their growth outlook.
One small business to consider is COG Financial Services Ltd (ASX: COG), according to the investment team at Wilson Asset Management (WAM). It’s one of the holdings in the listed investment company (LIC) WAM Research Ltd (ASX: WAX) portfolio, which targets the most compelling undervalued growth opportunities in the Australian market.
Compelling ASX small-cap share
WAM describes COG Financial Services as a business that’s Australia’s leading aggregator of finance brokers and equipment leasing brokers. Its net assets financed (NAF) were $9 billion in FY26. It also operates in the salary packaging sector, including novated leases.
In FY26, total salary packaging customers were 31% higher year over year, to 68,510, and novated lease customers increased by 98%, to 22,281.
WAM highlighted that the COG Financial Services share price rose 22% in September, following a stronger-than-expected FY26 full-year result and expectations of further earnings upgrades.
The investment team noted that the ASX small-cap share’s management is targeting at least 10% earnings growth in FY27, supported by momentum in its salary packaging business and contributions from recent acquisitions.
Wilson Asset Management believes the COG Financial Services share price remains attractive and could improve as salary packaging becomes a larger part of group earnings.
The positive outlook for the business is also supported by opportunities for further acquisitions and earnings upgrades.
Over the medium term, improvement in the broader economic environment could benefit the company’s broking and aggregation business, which has a significant presence in the small and medium-sized enterprise (SME) asset finance market.
How much is the COG Financial Services share price undervalued?
Other experts are also optimistic about the potential for this ASX small-cap share to deliver good returns.
According to CMC Invest, there have been three analyst ratings on the business within the last three months, all of which were buy ratings.
The average price target from those three analysts is $2.10, implying a possible 18% rise over the next year from its level at the time of writing. In other words, it could be one to watch.
The post This ASX small-cap share is predicted to deliver market-beating returns appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.