Freedom identified a micro-cap stock with growth potential of nearly 18% over two months

Freedom Broker believes that the stock price of Coda Octopus Group, a micro-cap developer of sonar solutions for underwater exploration and diving, could rise by nearly 18% in just two months. In June, the company announced that the U.S. Navy had approved its new system for military divers. This opens the door for the developer to government contracts, analysts explain.

Coda shares could rise to $12 over the next two months, according to an investment note from Freedom Broker (available on Oninvest). On Wednesday, August 26, the company’s shares closed at $10.2. Thus, Freedom’s target price implies growth potential of nearly 18%.

Coda’s main prospects stem from the U.S. Navy’s recent approval of its new development—the Diver Augmented Visual Display (DAVD) system. It provides shared visualization for those underwater and on land and is designed for use in both the defense and commercial sectors. In addition, DAVD enables operations in zero-visibility conditions, thereby solving a long-standing industry challenge, the company wrote.

Military approval of the development gives Coda access to government procurement: the company expects the bulk of the activity to take place in the second half of fiscal year 2026 (ending October 31), Freedom reports. Investors want to see signs of a return to growth for the company, and the third-quarter earnings report, scheduled for release on September 14, could provide confirmation of this, Freedom adds.

According to analysts, the main focus will be on the recovery of the Marine Technology segment. This is Coda’s largest division, which, among other things, sells sonar systems for seafloor exploration as well as motion sensors for ships. In the second fiscal quarter, the division’s revenue fell by nearly 27%—to $2.8 million—largely due to the conflict in the Middle East. At the same time, the company’s total revenue for the reporting period declined by 1.6% to $6.9 million. On June 15, the day the quarterly report was released, Coda’s stock price plummeted by nearly 15%.

Investors will also be keeping an eye on DAVD's performance and the development of NANO Gen, Coda's latest line of ultra-compact sonar devices, according to Freedom.

Apart from Freedom, only one analyst—from Alliance Global Partners— is covering the company. Both brokers recommend buying Coda shares; the average price target is $14, which represents a 37% upside from the last closing price.