Category: Stock Market

When I think about passive income investing, I’m not looking for complexity. I want dependable cash flow, broad diversification, and something I can realistically hold through different market conditions without constantly tinkering.

For ASX investors focused on income in 2026, I think exchange-traded funds (ETFs) remain one of the cleanest ways to achieve that. 

In particular, there are two high-yield ASX ETFs that stand out to me as sensible building blocks for a long-term income portfolio.

Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)

Betashares S&P Australian Shares High Yield ETF is one of the more interesting income ETFs on the ASX, in my view, because it goes a step further than simply chasing the highest headline yields.

The fund holds 50 high-yielding Australian shares, but importantly, it applies screens designed to avoid dividend traps. That means it looks to exclude companies paying dividends that appear unsustainable or come with excessive volatility. For income investors, that distinction really matters.

Another feature I like is the monthly income profile. The Betashares S&P Australian Shares High Yield ETF pays monthly distributions, which can be particularly appealing to investors seeking regular cash flow to supplement wages or retirement income. The most recent monthly distribution was 11.91 cents per share. Annualised, that comes to roughly $1.43 per share. Against a share price of around $32.16, that implies a yield in the region of 4.4%.

The underlying portfolio is exactly what you would expect from a high-yield Australian strategy. Major banks, large resource companies, and infrastructure names feature prominently. BHP Group Ltd (ASX: BHP), the big four banks, Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Transurban Group (ASX: TCL), and Woodside Energy Group Ltd (ASX: WDS) all sit near the top of the holdings list. That gives the fund a very familiar, blue-chip income profile.

For investors looking to maximise income while still owning quality Australian businesses, I think the HYLD ETF makes a strong case.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The Vanguard Australian Shares High Yield ETF takes a slightly different approach but still lands in a very similar place for passive-income-focused investors.

The VHY ETF tracks the FTSE Australia High Dividend Yield Index and provides exposure to ASX shares with higher forecast dividends than the broader market. It deliberately caps industry and single-company exposure, which helps prevent the portfolio from becoming overly concentrated in any one area.

One thing I appreciate about the Betashares S&P Australian Shares High Yield ETF is its simplicity. It does not attempt to time dividends or apply complex overlays. Instead, it offers low-cost exposure to a diversified group of high-yield Australian shares, backed by Vanguard’s long-standing index approach.

The ETF currently trades on a trailing yield of around 4.25%. While it doesn’t offer monthly distributions like the HYLD ETF, it still provides a steady income stream that many long-term investors value. Its largest holdings include BHP, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Macquarie Group Ltd (ASX: MQG), and Rio Tinto Ltd (ASX: RIO), which reflects the reality of where much of Australia’s dividend income comes from.

For investors who prefer a more traditional, low-cost index structure with a clear income tilt, this ETF is a very solid option.

Foolish Takeaway

High-yield passive income doesn’t need to be complicated.

For 2026, I think both Betashares S&P Australian Shares High Yield ETF and Vanguard Australian Shares High Yield ETF offer sensible, diversified ways to generate income from the ASX.

They won’t eliminate volatility, and distributions can move around year to year, but for investors focused on long-term cash flow rather than short-term price moves, they tick a lot of boxes.

The post Here are my 2 favourite ASX ETFs to buy for high-yield passive income in 2026 appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia, Transurban Group, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group, Transurban Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group, Telstra Group, and Transurban Group. The Motley Fool Australia has recommended BHP Group, Vanguard Australian Shares High Yield ETF, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Lotus Resources Ltd (ASX: LOT) shares have returned from their trading halt and crashed deep into the red.

In morning trade, the ASX uranium stock is down by a disappointing 30% to $2.00.

Lotus Resources owns an 85% interest in the Kayelekera Uranium Mine in Malawi, and 100% of the Letlhakane Uranium Project in Botswana.

Why is this ASX uranium stock crashing?

The catalyst for today’s weakness has been news that the uranium producer has successfully completed its bookbuild for a non-underwritten placement to raise $76 million.

These funds are being raised at $2.15 per new share, which represents a 25% discount to its last close price.

Management advised that it received strong demand from both existing shareholders, as well as new overseas and domestic institutional investors.

In addition, broad weakness in the uranium industry has weighed on its shares. Fellow ASX uranium stocks Paladin Energy Ltd (ASX: PDN) and Boss Energy Ltd (ASX: BOE) are both down over 7% at the time of writing.

Why is it raising funds?

The ASX uranium stock revealed that the funds will be used to support the execution and completion of the acid plant and grid connection projects, which will optimise operating costs.

In addition, the cash injection will support the typical ~5-6 month uranium working capital cycle, with potential for additional liquidity available via inventory pre-payment facilities which are under negotiation.

Commenting on the placement, the ASX uranium stock’s managing director, Greg Bittar, said:

We are delighted with the support we have received from existing and new institutional shareholders, which provides us with an enhanced liquidity runway during ramp up to reach steady-state production and expected first shipment in Q2 CY2026.

The funding delivers a simplified, more flexible balance sheet, along with funding certainty as Kayelekera progresses to positive cash flow, and we are positioned to maximise exposure to potential uranium price upside.

The company will now push ahead with its share purchase plan, which is aiming to raise a further $5 million. However, with the offer price currently above its actual share price, demand for the share purchase plan may not be strong.

Unfortunately for shareholders, following today’s sharp decline, the Lotus Resources share price has now given back all its annual gains and more. It is now down by approximately 27% since this time last year.

The post Why is this ASX uranium stock crashing 30%? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

The Web Travel Group Ltd (ASX: WEB) share price is imploding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $4.20. In early morning trade on Friday, shares plunged to $2.475 each, down 41.1%. At the time of writing, in late morning trade, shares are changing hands for $2.69 apiece, down 36%.

For some context, the ASX 200 is down 1.6% at this same time.

Here’s what looks to be sending investors rushing for their sell buttons today.

Web Travel share price hit on Spanish tax action

This morning, the ASX 200 travel stock announced that the Special Delegation of the Balearic Islands of the Spanish Tax Agency has commenced an audit of its Spanish subsidiary.

The audit is reviewing the direct taxes paid (and owed) between April 2021 to March 2024, as well as indirect taxes for the period between January 2022 to December 2025.

Management said that the company is cooperating with the Spanish Tax Agency.

Web Travel added that it will provide a market update for investors on the tax audit “as appropriate”.

What’s been happening with the ASX 200 travel share?

As you’re likely aware, Web Travel spun off its online travel agency business, Webjet Group (ASX: WJL), in September 2024. That’s left the ASX 200 travel stock to focus on its B2B travel business, WebBeds.

While the stock initially came under pressure following the split, the Web Travel share price managed to close 2025 modestly in the green. As of Thursday’s close, shares were down 12.5% year to date. Those losses have now grown to 43.8% at the time of writing.

Web Travel ended 2025 with a bang, with shares surging 24.5% from 19 November through to market close on 31 December.

The ASX 200 stock got a big boost following the release of its half-year results on 25 November. The Web Travel share price closed up 9.3% on the day, with the company reporting an 18% increase in bookings to 5.1 million for the six months to 30 September.

And the company’s total transaction value (TTV) soared 22% to a record of $3.17 billion, driving a 20% increase in revenue to $204.6 million.

Commenting on those results on the day, Web Travel managing director John Guscic said:

WebBeds continues to deliver world class TTV growth. We reported $3.2 billion TTV for the first six months of the financial year, 22% more than the same period last year, driven by the significant above-market growth coming through in our top three regions, particularly the Americas.

The post Why is the Web Travel share price crashing 41% on Friday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.

Austal Ltd (ASX: ASB) shares are down 3.45% in early morning trade on Friday. At the time of writing, the shares are changing hands at $5.88 a piece.

For the year to date, the shares have fallen 13.05% but they’re still 47.87% higher than what they were trading at this time last year. The shares spiked to an all-time high of $8.82 last month and have now crashed 32.65% to the current trading price.

What happened to Austal shares?

The Australian-based global shipbuilding company’s shares have enjoyed a bumper price increase this year as tailwinds push ASX defence sector stocks higher. 

Austal specialises in the design, construction, and support of defence and commercial vessels globally. Its products include naval vessels, defence surface-warfare combatants, high-speed support vessels, law-enforcement patrol boats, offshore vessels, and passenger and vehicle ferries.

The company won a couple of new contracts in December. The shipbuilder was awarded a contract extension worth more than $135 million to build two new Evolved Cape-class Patrol Boats for the Australian Border Force, bringing the total contracted to 14 vessels. It was also awarded a $1.029 billion design and construct contract to build 18 Landing Craft Medium (LCM) vessels for the Australian Army under the Commonwealth’s Strategic Shipbuilding Agreement.

In January, US President Donald Trump also said that the 2027 US defence budget should be US$1.5 trillion, well above the US$901 million so far approved. Other countries are also bolstering their defence spending.

There doesn’t appear to be any price-sensitive news out of the company to explain the latest sell-off. So the decline is most likely investors cashing in the strong gains earned over the past month or so.

Are Austal shares a buy, sell, or hold this year?

I think demand for defence companies will continue to climb this year as spending around the globe continues to rise. US tensions with Venezuela and Greenland could influence some more spending in the sector, while ongoing tensions in the Middle East are also likely to supercharge growth. Nations worldwide are prioritising military strength this year.

Analysts are optimistic about the outlook for Austal shares. TradingView data shows that two analysts have a strong buy rating and another two have a hold rating on the defence stock. The maximum target price is $8.10, which implies a potential 36.82% upside at the time of writing. 

The post Austal shares crash over 30% from their peak. Is it time to buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.

News Corporation (ASX: NWS) shares hit a new 12-month low on Friday morning despite the company posting an increase in second-quarter revenues and solid underlying earnings.

Shares in the media giant traded as low as $37.46, down 7.5%, before recovering to be 1.7% lower at $39.80.

The shares have traded as high as $57.16 over the past year; however, they are now at their lowest level for the period.

Solid operating result

The company said in a statement released to the ASX that net income was US$242 million, 21% down on the same quarter last year, which was inflated by a one-off favourable gain on REA Group Ltd (ASX: REA)’s sale of PropertyGuru.

Total segment EBITDA was up 9% to US$521 million, including a one-off $16 million write-down related to inventory at HarperCollins.

Dow Jones revenues were US$648 million, up 8% compared to the previous corresponding period, “driven by 20% growth at Risk & Compliance, higher digital circulation revenues and record digital advertising revenues”.

Book publishing revenues grew 6% for the quarter to US$633 million, while digital real estate services grew 8% to US$511 million.

News Media revenues were steady at $570 million.

Chief Executive Robert Thomson said it was a solid result.

We are delighted to report excellent second quarter results with both revenue and profitability growth accelerating from the prior quarter, and we see favourable signs for the second half of our fiscal year. Revenues increased 6 percent to $2.4 billion for the quarter and profitability improved by a robust 9%. The second quarter results were driven by sustained growth at Dow Jones and Digital Real Estate Services, which both achieved double-digit profit growth and have started the calendar year strongly. Given the current trajectory of our core drivers, we believe prospects for the third quarter are auspicious.

AI not a threat

Mr Thomson reiterated the value of assets such as Dow Jones in the face of the increase in the use of AI in the information space, saying expertise would continue to be paramount.

It is clear that expectations of AI’s impact are continuing to evolve and that the more perceptive players have come to realize that provenance is paramount. What is the point of acquiring cutting-edge semiconductors if they are being deployed to repurpose gormless, factless, feckless content sets? We do believe an increasing number of insightful companies understand this content contradiction and will indeed pay a premium for our premium content. This quarter we expanded our partnership with Bloomberg to include AI rights for our unique Dow Jones content and are progressing with other negotiations.  

Mr Thomson said the company had also continued its share buyback, “reflecting our confidence in News Corp’s strong cash position and belief in the intrinsic value of the company”.

The post News Corp shares plunge to a fresh 12-month low on earnings results appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Cameron England 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.

Rio Tinto Ltd (ASX: RIO) shares are in the spotlight on Friday and pushing higher in early trade.

At the time of writing, the mining giant’s shares are up 2.5% to $161.25.

This follows the release of an update on its proposed merger with Glencore (LSE: GLEN) that would form a $300 billion behemoth.

Rio Tinto shares higher on Glencore merger update

Investors have been buying the company’s shares today after it confirmed that it is no longer considering a possible merger with Glencore.

According to the release, the miner came to this conclusion after determining that it could not reach an agreement that would deliver value to its shareholders.

It acknowledged that the proposed deal would not align with its recent Capital Markets Day strategy, which highlighted its belief that a “stronger, sharper and simpler Rio Tinto” would “deliver leading returns.”

At the time, Rio Tinto’s chief executive, Simon Trott, said:

We are building from a position of strength for Rio Tinto’s next chapter, sharpening and simplifying the business to deliver leading returns. We will drive performance through discipline, productivity and unmatched growth to unlock the full potential of our diversified portfolio of world-class assets.

Merging with Glencore would almost certainly go against this strategy and not make Rio Tinto sharper and simpler.

In today’s brief announcement about the merger talks ending, Rio Tinto stated:

Rio Tinto assessed the opportunity and came to this view through the disciplined lens set out at its Capital Markets Day in December 2025 – prioritising long-term value and delivering leading shareholder returns.

What went wrong?

While Rio Tinto didn’t provide much colour on the merger talks, Glencore was more open.

It revealed that Rio Tinto wanted to fully lead the merged company with both CEO and chairman roles, which it didn’t agree with. It said:

The key terms of the potential offer were Rio Tinto retaining both the Chairman and Chief Executive Officer roles and delivering a proforma ownership of the combined company which, in our view, significantly undervalued Glencore’s underlying relative value contribution to the combined group, even before consideration of a suitable acquisition control premium.

We concluded that the proposed acquisition on these terms is not in the best interests of Glencore shareholders. It does not reflect our view on long term, through the cycle relative value, including not adequately valuing our copper business, and its leading growth pipeline, and apportioning material synergy value potential.

The post Rio Tinto shares charge higher after Glencore merger collapses appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

The Qantas Airways Ltd (ASX: QAN) share price has been through plenty of volatility, though it’s slightly down (2%) in 2026 to date, boosting the dividend yield.

Qantas has benefited from strong travel demand over the last few years, and this has helped the ASX travel share to restart paying dividends following the difficulty caused by the COVID-19 impacts.

The airline is sharing some of its profits generated each year in the form of passive income – let’s take a look at what’s expected of the company in the near term.

FY26 payout projected

Broker UBS is expecting the business to pay another good dividend in the 2026 financial year.

UBS projects the ASX travel share could increase its annual dividend per share to 35 cents in FY26. At the current Qantas share price, that translates into a cash dividend yield of 3.4%, or 4.9% including the franking credits.

The business is expected to increase its dividend per share in each of the subsequent years, which bodes well for shareholders.

UBS forecasts that the payout could rise to 38 cents per share in FY27, 40 cents per share in FY28, 44 cents per share in FY29, and 43 cents per share in FY30.

That suggests a potential grossed-up dividend yield of approximately 6% in FY30, including franking credits, at the current Qantas share price.

Is this a good time to buy at the current Qantas share price?

The ASX travel share is a popular investment right now. According to a CommSec collation of analyst ratings, there are 11 buy ratings and four hold ratings.

UBS is one of the brokers that rate the business as a buy and is expecting the business to deliver $1.8 billion of net profit in FY26, $1.9 billion in FY27, $2 billion in FY28, $2.2 billion in FY29, and $2.2 billion in FY30.

The broker noted that the Australian international market is scheduled to grow FY26 capacity by 9% year over year, which is a “strong rate of market growth”. There’s a question of whether there’s pressure on market fares or plane seat occupancy unless passenger demand is “keeping pace”.

UBS thinks Qantas’ core customers (corporate and premium leisure) will be relatively loyal amid competition. The broker said that Qantas’ challenge is not so much competitor pressure, but whether the core Australian customers will grow with it.

The broker has a price target of $11.50, implying a possible rise of around 11% within the next year, plus the dividend return.

The post Is the Qantas share price a buy for its 5% dividend yield? 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.

REA Group Ltd (ASX: REA) shares are on the slide on Friday morning.

At the time of writing, the ASX 200 stock is down 18% to 18% to $150.01.

This follows the release of the realestate.com.au operator’s half-year results before the market open.

ASX 200 stock crash on results day

For the six months ended 31 December, REA Group reported a 5% increase in revenue to $916 million. This reflects an 8% increase in Australian revenue and a 31% decline in international revenue.

On a like-for-like basis, which removes acquisitions and divestments from the equation, revenue was up 8% on the prior corresponding period, with Australian revenue up 8% and flat international revenue.

Management notes that Australian Residential revenue increased 7% to $658 million during the first half. This reflects a 14% increase in yield, partially offset by a 6% decline in national listings.

Commercial and New Homes revenue increased 10% to $121 million, Financial Services revenue increased 11% to $58 million, and other revenue was up 8% to $35 million.

Group operating expenses increased 3% over the prior corresponding period to $347 million.

This underpinned a 9% lift in net profit after tax to $341 million for the half. Earnings per share also came in 9% higher at $2.58. Unfortunately, this was short of the market’s expectations.

Performance metrics

REA Group’s first-half performance was driven by its domination of the Australian market.

It revealed that 12.7 million people visited each month on average during the first half, including a record 13.2 million in November. From these, it estimates that 6.4 million people exclusively used realestate.com.au.

It also boasts 146.1 million average monthly visits, which is a staggering 105.9 million more monthly visits than the nearest competitor on average.

Other metrics of note include a 20% increase in average monthly realestate.com.au buyer enquiries, a 38% increase in realestate.com.au seller leads, and a 10% increase in active members.

Commenting on the half, the ASX 200 stock’s CEO, Cameron McIntyre, said:

REA Group’s first half performance was underpinned by strong double-digit yield growth in our core residential business. Our focus on richer, more immersive consumer experiences supported record audience and strong engagement. Our customers continued to recognise the value of our premium products and their ability to maximise campaigns and support stronger sales results.

Into the second half we will continue to drive innovation with new product features and capabilities to enhance the value and experiences we deliver. These, coupled with ongoing strength in property market fundamentals, position REA well for further growth in the remainder of FY26.

Outlook

The ASX 200 stock is anticipating 12% to 14% residential Buy yield growth in FY 2026, with the magnitude of growth potentially impacted by geo mix movements across the remainder of the year.

The company expects positive operating jaws (costs growth lower than revenue growth), with Australian jaws anticipated to be open modestly.

The post Why is the REA share price crashing 18% today? appeared first on The Motley Fool Australia.

More reading

• News Corp shares plunge to a fresh 12-month low on earnings results
• News Corp reports robust Q2 FY26 earnings growth
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Motley Fool contributor James Mickleboro has positions in REA Group. 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.

S&P/ASX 300 Index (ASX: XKO) healthcare share Immutep Ltd (ASX: IMM) is joining the broader market sell-down today.

Shares in the clinical-stage biotech company closed yesterday trading for 38 cents. In morning trade on Friday, shares are changing hands for 37.25 cents apiece, down 2%.

For some context, the ASX 300 is down 1.5% at this same time.

With today’s slide factored in, Immutep shares are up 12.9% over the past year and up 43.3% since 8 December.

Shares got a big lift on 9 December after the company revealed that it had entered into a strategic collaboration and exclusive licensing agreement with Indian-based global pharmaceutical company, Dr. Reddy’s.

Here’s what’s catching ASX investor attention today.

ASX 300 healthcare share hits trial milestone

This morning, Immutep announced that it had achieved a key milestone in its TACTI-004 Phase III trial.

That trial is evaluating its eftilagimod alfa (efti) product in combination with MSD’s anti-PD-1 therapy, KEYTRUDA (pembrolizumab), and chemotherapy as first-line therapy for advanced/metastatic non-small cell lung cancer.

As for that milestone, the ASX 300 healthcare share said it has now achieved 50% of the patient enrolment target for the cancer trial, with 378 patients now taking part globally.

Looking ahead, Immutep said it expects to complete futility analysis in the first quarter of calendar year 2026.

It expects patient enrolment to complete in the third quarter, with enrolment reported to be continuing at a “robust pace”. The company noted that more than 140 clinical sites are now activated across 27 countries.

What did management say?

Commenting on the enrolment achievement for the ASX 300 healthcare shares, Immutep CEO Marc Voigt said:

The excellent pace of enrolment globally in the TACTI-004 trial speaks to the promise of efti and the need for more efficacious therapies in the first line setting for patients with advanced/metastatic non-small cell lung cancer.

Our team continues to work hard to bring this innovative cancer immunotherapy to market and looks forward to delivering on additional important upcoming milestones ahead, including the futility analysis in the first quarter and completing patient enrolment in the third quarter this year.

Voigt said that the combination of efti with KEYTRUDA and chemotherapy has the potential to establish a new standard of care in patients with advanced/metastatic non-small cell lung cancer, which is one of the largest and deadliest indications in oncology.

Immutep is aiming to expand the number of patients who respond to anti-PD-1 therapy, across all PD-L1 expression levels, along with enhancing clinical outcomes and extending patients’ survival.

The post Up 43% since December, ASX 300 healthcare share announces milestone achievement appeared first on The Motley Fool Australia.

More reading

• This ASX biotech just smashed its quarterly update. So why are its shares falling?

Motley Fool contributor Bernd Struben 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.

If you have a high tolerance for risk, then it could be worth checking out the ASX penny stock in this article.

That’s because the team at Bell Potter believes its shares could rocket over the remainder of 2026.

Which ASX penny stock?

The penny stock that Bell Potter is tipping as a (speculative) buy is Bubs Australia Ltd (ASX: BUB).

It is a small rival to infant formula manufacturer A2 Milk Company Ltd (ASX: A2M), with a focus on goat’s milk.

Bell Potter notes that the ASX penny stock has released its quarterly update and revealed revenue largely in line with expectations thanks to strong growth in the United States. It said:

2Q26 Net revenue of $29.9m was up +4% YoY (and vs. BPe of $30.2m and 1Q26 of $25.6m). US IMF growth was +46% YoY to $17.4m and the main driver of revenue growth. T12M Revenue was up +23% YoY to $109.5m a figure broadly comparable to 1Q26. 1H25 Revenues are essentially in line with our forecasts at $55.5m and BUB noted a 1H26 GM of 49.3%, which is above the 40-45% FY26e guidance range and implies a 2Q26 GM of 51.8%.

The broker also points out that there were no comments from management relating to its outlook, but it expects solid growth to continue, setting it up for a decent FY 2027. It adds:

There are no firm outlook comments. We note that BUB has previously provided FY26e guidance of: (1) FY26e revenue of $120-125m, implying a 2H26e annualised run rate of $129-139m (vs. BPe FY27e of $135m); (2) Gross margin target of 40-45% (1Q26 46.4% and 2Q26 of 51.8%) and reported EBITDA of $1-2m.

However, a lot of this will depend on its approval process in the US, where it is seeking permanent access. It adds:

BUB continues to progress with its USFDA application for permanent access. The USFDA has confirmed that it will continue to facilitate the importation, sale, and distribution of BUB product while its review is being finalised.

Big potential returns

According to the note, the broker has responded to the update by upgrading the ASX penny stock to a speculative buy rating with an improved price target of 18 cents.

Based on its current share price of 12.7 cents, this implies potential upside of 42% for investors over the next 12 months.

Commenting on its buy recommendation, the broker said:

We upgrade to Buy, Speculative risk rating (prev. Hold, Speculative rating). 2Q26 revenue growth was consistent with our expectations, although 1H26e gross margins were stronger. USFDA remains the largest risk factor, however, we suspect the delays are more linked to 2025 shutdowns than BUB product. New management look to be increasing brand support, resulting in what looks a more consistent US revenue profile. FY26e margin risk looks to the upside following a strong 1H26 outcome.

The post This ASX penny stock could rocket 40%, says broker appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.