Openpay Group Ltd (ASX:OPY) and this ASX small cap share will be on watch in 2021. Here’s what you need to know about them…
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If you’re interested in gaining exposure to the small side of the market, then you might want to take a look at the shares listed below.
Here’s why these two small cap shares have been named as ones to watch in 2021:
Nitro Software Ltd (ASX: NTO)
Nitro Software is a software company aiming to drive digital transformation in organisations around the world across multiple industries.
Its core solution is the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers through a horizontal, software-as-a-service, and desktop-based software solution.
Demand for its subscriptions has been strong despite the pandemic. This led to Nitro delivering third quarter cash receipts of $11.6 million, up 17% on the previous quarter.
This has put the company on course to deliver subscription annualised recurring revenue (ARR) of $26 million to $27 million in FY 2020, which is ahead of its prospectus guidance of $24.4 million.
Analysts at Morgan Stanley have been pleased with its performance. They have an overweight rating and $3.50 price target on its shares. This compares to the latest Nitro share price of $3.14.
Openpay Group Ltd (ASX: OPY)
Another small cap to watch is buy now pay later provider Openpay. Like many of its peers such as Afterpay Ltd (ASX: APT), it has been growing at a strong rate over the last 12 months.
For example, Openpay’s total transaction value (TTV) in November reached a record of $35.7 million. This was driven by strong Black Friday and Cyber Monday sales, with the former representing the best day of trading in Openpay’s history. Black Friday 2021 saw TTV of $2.3 million, almost double a year earlier.
At present the company operates in Australia and the UK, but has announced plans to enter the lucrative US market. If this expansion is a success, it could give its TTV a major boost in 2021.
One broker that is bullish on the company is Shaw and Partners. Its analysts have a buy rating and $5.00 price target on its shares at present. This compares to the current Openpay share price of $2.30. Shaw and Partners notes that that Openpay’s shares are trading at a significant discount to its peers.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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