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2 exciting small cap ASX shares for your watchlist

Volpara Health Technologies Ltd (ASX:VHT) and this small cap ASX share could be deserving of a spot on your watchlist…
The post 2 exciting small cap ASX shares for your watchlist appeared first on Motley Fool Australia. –

As well as being home to countless blue chip shares, the Australian share market is home to a good number of promising small caps.

Two small cap shares that could be deserving of a spot on your watchlist are listed below. Here’s what you need to know about them:

MNF Group Ltd (ASX: MNF)

MNF Group is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers. This technology essentially allows telephone calls to be made over the internet. Due to the NBN rollout and the work from home initiative, demand for MNF’s VoIP services has been growing strongly this year. This led to the company recording a 27% increase in recurring revenue to $101.5 million in FY 2020.

Another positive was that it reported a 17% increase in phone numbers on its network to 4.5 million. Management notes that this metric is a key performance indicator for future growth, which bodes well for its performance in FY 2021.

One broker that is confident in the company’s prospects is Morgan Stanley. Late last month its analysts put an overweight rating and $6.30 price target on its shares. This compares to its last close price of $4.96.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is the New Zealand-based healthcare technology company behind the VolparaEnterprise software solution. This product is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services. In addition to this, the company has a growing number of add-on solutions that work with VolparaEnterprise. These include VolparaDensity, VolparaDose, VolparaPressure, VolparaLive, and VolparaPositioning.

Management expects these add-ons to drive material average revenue per user (ARPU) growth in the future. At the end of the second quarter, its ARPU stood at US$1.16. But management is aiming to grow it to US$10 in the future for its full product suite. Together with market share gains and potential geographic expansion, management appears confident that it is well-placed for growth.

One broker that agrees is Morgans. At the end of last month it put an add rating and $1.71 price target on the company’s shares. The Volpara share price ended the week at $1.32.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 exciting small cap ASX shares for your watchlist appeared first on Motley Fool Australia.

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