Here are a couple of small caps to watch…
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At the small end of the market, there are a number of shares that have the potential to grow strongly in the future.
Two that could be worth watching very closely are listed below. Here’s what you need to know about these small cap ASX shares:
Booktopia Group Ltd (ASX: BKG)
Booktopia could be a small cap ASX share to watch. It is a rapidly growing online book retailer which shipped 8.2 million units to 1.8 million active customers in FY 2021. This was an increase of 26% and 19%, respectively, year on year.
The shift to online shopping and its new automated distribution centre were drivers of this growth. This ultimately underpinned a 35% lift in revenue to $223.9 million and a 125% jump in underlying EBITDA to $13.6 million.
Analysts at Morgans are very positive on the company’s outlook. They believe the company is well-placed to win market share and continue its growth. The broker currently has an add rating and $3.72 price target on Booktopia’s shares.
Infomedia Limited (ASX: IFM)
Another small cap ASX share to look at is Infomedia. It is a leading global provider of software-as-a-service solutions to the parts and service sector of the automotive industry.
Despite battling tough trading conditions in FY 2021, Infomedia still delivered a solid 3% increase in revenue to $97.4 million and an 8% lift in net profit after tax to $20 million.
Pleasingly, trading conditions are improving and management expects a much stronger performance in FY 2022. Its revenue guidance is $117 million to $123 million. The mid-point of this guidance range implies revenue growth of 23% year on year.
And while its CEO has just resigned to join Nuix Ltd (ASX: NXL), the company stressed that it remains on course to achieve the above guidance. In light of this, the share price weakness that has followed this announcement could be a buying opportunity for investors.
One broker that appears to see that as the case is Bell Potter. It currently has a buy rating and $2.00 price target on its shares.
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Motley Fool contributor 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 and has recommended Infomedia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited and Nuix Pty Ltd. The Motley Fool Australia has recommended Infomedia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.