If you’re an investor with a high tolerance for risk, the Australian Securities Exchange (ASX) offers speculative opportunities that could yield substantial returns. Brokers have identified two high-risk, high-reward ASX shares with the potential to rise by 60% to 100%. These shares are Intelligent Monitoring Group Ltd (ASX: IMB) and LinQ Minerals Ltd (ASX: LNQ).
Intelligent Monitoring Group: A Strategic Acquisition
The team at Morgans has earmarked Intelligent Monitoring Group Ltd as a promising investment. This company specializes in security, monitoring, and risk management services. Morgans was particularly impressed by IMB’s recent acquisition of two businesses from Johnson Control, which are already generating significant recurring revenue.
According to Morgans, these acquisitions position IMB to benefit from a broader trend where conglomerates are divesting non-core assets. This strategy could potentially enhance IMB’s market position and financial performance.
IMB has acquired two businesses for just $40m from Johnson Control, which together produce $10m EBITDA (4x EBITDA). Each business has sticky revenue (75% recurring) with what looks like a strong customer base.
Morgans anticipates that the acquisition will be accretive to earnings per share (EPS) by 25-28%. However, they have adjusted their financial models to incorporate full tax from FY26 onwards, which results in an increase in EBIT but a decrease in EPS for FY26 and FY27. The firm has set a target price of $1.00 for IMB, suggesting a potential upside of over 60% from current levels.
LinQ Minerals: Exploring the Lachlan Fold Belt
Another speculative stock drawing attention is LinQ Minerals Ltd, a gold explorer with significant holdings in the Lachlan Fold Belt. This includes the Gilmore Gold Copper Project, an advanced exploration stage project covering approximately 597 square kilometers.
Bell Potter, another brokerage firm, is optimistic about LinQ Minerals, citing the company’s experienced management team and valuable tenement package as key strengths. The firm believes that LinQ is well-positioned to capitalize on its resource base.
LNQ has an exceptionally well-qualified and experienced management team and Board. In our view, it signals clear capability to discover, grow, evaluate and potentially construct a substantial gold-copper project.
The Gilmore project is located in a region with established infrastructure, which could facilitate capital-efficient development. Bell Potter has set a speculative buy rating and a target price of 44 cents for LinQ’s shares, indicating a potential upside of over 100% from current levels.
Context and Market Dynamics
The recommendations for IMB and LNQ come at a time when investors are increasingly looking for opportunities in sectors that promise high growth. The acquisitions by IMB reflect a broader industry trend where companies are focusing on core competencies and divesting non-core operations. This trend has been observed across various sectors, including technology and industrials.
Meanwhile, the mining sector, particularly gold and copper exploration, continues to attract significant interest due to the ongoing demand for these commodities. The Lachlan Fold Belt, where LinQ operates, is known for its rich mineral deposits, making it a hotspot for exploration activities.
Expert Opinions and Future Prospects
Industry experts note that while speculative stocks can offer substantial returns, they also come with increased risk. Investors are advised to consider their risk tolerance and investment horizon before diving into such opportunities.
Looking ahead, both IMB and LNQ have strategic plans that could drive growth. IMB’s focus on integrating its new acquisitions and exploring further opportunities could enhance its market position. For LinQ, ongoing exploration and potential resource expansion at the Gilmore project could unlock significant value.
As these companies continue to execute their strategies, investors will be closely watching for updates on their progress and any new developments that could impact their valuations.
