3 exciting small cap ASX shares to buy

The 3 small cap ASX shares in this article are exciting and could be worth a spot in a portfolio. 1 stock is City Chic Collective (ASX:CCX).
The post 3 exciting small cap ASX shares to buy appeared first on The Motley Fool Australia. –


There are some small cap ASX shares that investors may think are exciting and worth a closer look.

Businesses that are earlier on in their growth journey may have a longer growth runway than companies that are already very large.

Here are three businesses that are quite small but are growing:

Sezzle Inc (ASX: SZL)

According to the ASX, Sezzle has a market capitalisation of $1.26 billion.

Sezzle is a buy now, pay later business that’s headquartered and focused in the US.

In its latest update, which was for the month of November 2020, Sezzle said that its active consumers had grown by 151.5% year on year to 2.07 million and active merchants went up by 164.5% to 24,846.

November was an important month for retail-related businesses because it included the four big retail days of Black Friday to Cyber Monday (BFCM) weekend.

The month saw underlying merchant sales (UMS) grow 188.5% to AU$153.9 million with annualised UMS also growing by 188.5% to AU$1.85 billion.

At the time of that update, Sezzle CEO and executive Chair Charlie Youakin said: “In addition to our record setting performance in November and over the BFCM weekend, we are extremely excited about the direction of our business, as we recently partnered with GameStop and eCommerce platform Wix.

“Sezzle is now offered at Gamestop’s network of more than 3,300 US retail stores, its online store, and in the GameStop mobile app. Our integration on Wix is available to all Wix merchants in the United States, Canada, India and in the future will be available in other regions as Sezzle expands internationally.”

City Chic Collective Ltd (ASX: CCX)

According to the ASX, City Chic has a market capitalisation of $911 million.

City Chic is a global omni-channel retailer that specialises in plus-size women’s apparel, footwear and accessories. It has a number of brands including City Chic, Avenue, CCX, Hips & Curves and Fox & Royal. It has a network of 96 stores across Australia and New Zealand, websites operating in Australia, New Zealand and the US, marketplace and wholesale partnerships with major US retailers such as Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.

FY20 was a disrupted year for the small cap ASX share with plenty of stores being closed during the COVID-19 lockdown period. Even so, it grew total revenue by 31% and online sales went up 113.5%. Online sales made up 65% of total sales in FY20.

The northern hemisphere made up 42% of global sales and this is about to rise after the announced acquisition of Evans in the UK from Arcadia after going into administration. The plus-sized clothing business made £26 million (A$46 million) of revenue from its e-commerce and wholesale business in the 12 months to August 2020. City Chic won’t be buying the physical store network.

At the current City Chic share price, it’s priced at 24x FY23’s estimated earnings.

Volpara Health Technologies Ltd (ASX: VHT)

According to the ASX, Volpara has a market capitalisation of $346 million.

Volpara is a digital health company focused on early detection of breast cancer by improving the quality of screening using artificial intelligence (AI).

The small cap ASX share said that its gross profit margin is now 92%. In the FY21 half-year result it showed that its annual recurring revenue went up by around 27% to NZ$19.9 million with subscription revenue growing 71% to NZ$8.8 million.

The number of women in the US that had one of Volpara’s products applied on their images and data grew from 25.8% in the first half of FY20 to approximately 27% in the first half of FY21.

Volpara has several goals including: maintaining a high retention rate, increasing average revenue per user, win new customers, upsell with existing customers and it may make acquisitions.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 exciting small cap ASX shares to buy appeared first on The Motley Fool Australia.

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