Bigtincan Holdings Ltd (ASX:BTH) and this ASX small cap share are growing at a very quick rate. Here’s why they could be in the buy zone…
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Due to the strong potential returns on offer at the small side of the market, having a little exposure to it can be a good thing for a portfolio. However, not all small caps are investment grade, so investors do need to be careful.
With that in mind, I have picked out two small cap ASX shares that have been named as buys. They are as follows:
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is an artificial intelligence-powered sales enablement automation platform provider. Its platform is currently used by 7 of the top 10 companies on the Fortune 500.
Last week Bigtincan released its half year results and revealed that its strong growth has continued in FY 2021. It advised that its annualised recurring revenue (ARR) reached $48.4 million at the end of the half. This was a 50% increase over the prior corresponding period.
Looking ahead, management expects its growth to continue, albeit at a slower rate, in the second half. Management expects to hit the top end of its FY 2021 ARR guidance of $49 million to $53 million.
Another positive was that the company ended the period with a cash balance of $65 million. This gives it plenty of firepower to boost its growth through earnings accretive acquisitions.
Analysts at Ord Minnett were happy with its performance. Earlier this week, they put a buy rating and $1.08 price target on its shares. The broker believes Bigtincan has a long runway for growth in a large addressable market.
SILK Laser Australia Limited (ASX: SLA)
Another small cap ASX share to look at is SILK Laser. It is a laser, skin care, and cosmetic injections company.
SILK has continued its strong growth in FY 2021 despite the pandemic. The company recently released its half year results and revealed a 62% increase in network sales to $44.9 million and a 78% lift in revenue to $30.6 million.
This was driven by strong like for like sales and the addition of four new clinics to its growing network. SILK now has a total of 56 clinics across the country. This is still well short of its current target of 150 clinics.
And thanks to margin expansion, on the bottom line, the company’s net profit after tax came in 305% higher than the prior corresponding period at $4.7 million.
Ord Minnett was also pleased with this result. In response, it retained its buy rating and lifted its price target to $5.06.
Where to invest $1,000 right now
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*Returns as of February 15th 2021
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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. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.