If you’re wanting to invest in the small side of the Australian share market, then the three small caps listed below could be worth a closer look.

All three have been tipped for big things in the future. Here’s why these small cap ASX shares could be worth adding to your watchlist:

Alcidion Group Ltd (ASX: ALC)

The first small cap ASX share to watch is this growing informatics solutions company. Alcidion is the company behind healthcare software products Miya, Patientrack and Smartpage. These products are becoming increasingly popular with healthcare institutions and it isn’t hard to see why. Patientrack, for example, helps clinicians know a patient’s status in real-time. It uses predictive algorithms to support time-critical care, allowing doctors to intervene and prevent patient deterioration faster than ever before. Looking ahead, Alcidion appears well-placed for growth in the future thanks to the shift to a paperless environment in the healthcare sector and a number of favourable industry tailwinds.

Bell Potter currently has a buy rating and 45 cents price target on Alcidion’s shares.

BlueBet Holdings Ltd (ASX: BBT)

Another small cap ASX share to watch is BlueBet. It is an online sports betting company that allows users to bet on all Australian and international racing and sports. BlueBet has been growing very strongly thanks to the increasing popularity of sports betting and the shift away from betting houses. The good news is that management is confident that this trend can continue. It also believes it is well positioned to substantially grow its modest share of the market in Australia. In addition, the company is in the process of expanding into the massive US market.

Morgans is bullish on BlueBet and has an add rating and $2.60 price target on its shares.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a growing MedTech software as a service company and the provider of breast imaging analytics and analysis products. Its products improve clinical decision-making and support the early detection of breast cancer. Demand has been growing strongly in recent years and has continued in FY 2022. During the second quarter, the company reported a 63% increase in subscription based revenue. This took its annualised recurring revenue to US$20.4 million at the end of the period. This is still only a fraction of its US$750 million addressable market in just breast cancer screening.

Morgans currently has an add rating and $1.87 price target on the company’s shares.

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

More reading

• 2 ASX healthcare shares rated as buys
• Brokers name 3 ASX shares to buy today
• Why Aussie Broadband, BlueBet, Hipages, and JB Hi-Fi shares are rising
• BlueBet (ASX:BBT) share price jumps 8% on record first quarter
• Alcidion (ASX:ALC) share price dips 4% despite positive quarterly update

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 Alcidion Group Ltd and VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Alcidion Group Ltd and BlueBet Holdings Ltd. 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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The big four ASX banks of Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) have now both reported their results. How do they compare?

How businesses perform in the same industry can indicate whether one is better value for an investor than the other.

First, let’s look at the headline numbers.

Profit growth

NAB reported that it made $6.36 billion of statutory net profit, whilst cash earnings came in at $6.56 billion – growth of 76.8% on FY20. Excluding FY20 large notable items, the cash earnings increased by 38.6%.

Meanwhile, CBA made statutory net profit of $8.84 billion. Cash net profit increased 19.8% to $8.65 billion.

Whilst CBA did make a bigger profit, its profit grew at a slower rate compared to NAB.

Both banks acknowledged that economic conditions had improved and the outlook was better.

Loan impairment expense

It was large loan impairment expenses that hurt the banks in FY20 and a significant improvement in FY21 that helped profit significantly rise.

NAB said that its credit impairment charge in FY21 was a write-back of $217 million, compared to the FY20 charge of $2.76 billion. That significant improvement was due to a reduction in charges for forward-looking provisions and lower underlying charges.

Turning to CBA, its FY21 loan impairment expense was $554 million – an improvement of 78%. CBA said that this reflected improved economic conditions, though it’s maintaining a “strong” provision coverage ratio of 1.63%, reflecting the continuing economic uncertainty.

Net interest margin (NIM)

The NIM is a measure of bank profitability, it shows how much profit a bank is making on lending out money, compared to the cost of funding – like deposits and bonds.

NAB said that its NIM dropped 6 basis points to 1.71%. The big four ASX bank explained that the margin was hurting from the impacts of the low interest rate environment combined with home lending competition and shift to fixed-rate lending.

Meanwhile, CBA’s NIM in FY21 declined by 4 basis points to 2.03%. CBA’s NIM declined less in FY21 than NAB and it’s currently a higher margin.

Balance sheet strength and buy-backs

All of the big banks have seen growing levels of capital on their balance sheet, with the common equity tier 1 (CET1) capital ratios above APRA’s ‘unquestionably’ strong level of 10.5%.

NAB said it had a CET1 ratio of 13% at September 2021. This was an increase of 153 basis points over the financial year. NAB announced at the end of July that it was going to buy back up to $2.5 billion of shares

CBA ended its FY21 with a CET1 ratio of 13.1%. CBA decided to launch a $6 billion off-market share buy-back due to its “strong capital position”.

Both banks have/had large amounts of capital on their balance sheets and are using it to boost shareholder returns.

Dividends

NAB decided to pay an annual dividend of $1.27 per share, which was an increase of 112%. That currently translates to a grossed-up dividend yield of 6.1%.

CBA’s dividend was increased by 17% to $3.50 per share, though it wasn’t cut as much in FY20 as other banks. CBA currently has a grossed-up dividend yield of 4.6%.

NAB shares currently offers a larger dividend yield.

Are the big banks buys?

Plenty of brokers now believe that CBA shares are a sell, such as Citi with a price target of $94.50.

However, NAB ratings are largely hold/neutral with a few buy ratings. Staying with Citi, the broker is neutral on NAB with a price target of $29.50.

The post How do the CBA (ASX:CBA) results stack up against NAB’s? appeared first on The Motley Fool Australia.

More reading

• NAB (ASX:NAB) offers $250,000 loans in 20 minutes in latest competitive push
• Do analysts rate the NAB share price a buy after its FY21 result?
• How does the CBA share price performance stack up against the other big banks?
• Why does NAB’s (ASX:NAB) CEO want house prices to fall?
• Here are the top 10 ASX shares today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Appen Ltd (ASX: APX)

According to a note out of Citi, its analysts have retained their buy rating and $17.10 price target on this artificial intelligence data services company’s shares. While the broker acknowledges that Appen will need a big second half to achieve its guidance, it is encouraged by the recent update from industry peer Telus. It recently reported a 30% increase in third quarter revenue following a rebound in demand. This could bode well for demand for Appen’s services. The Appen share price ended the week at $10.84.

Breville Group Ltd (ASX: BRG)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $36.00 price target on this kitchen appliance company’s shares. This follows the release of a trading update at its annual general meeting. Morgan Stanley was pleased with the update and believes the company is well-placed to achieve consensus estimates in FY 2022. Outside this, its analysts remain positive on Breville’s long term outlook thanks to its reinvestments and global expansion. The Breville share price was fetching $29.94 on Friday.

Liontown Resources Limited (ASX: LTR)

Analysts at Macquarie have retained their outperform rating and lifted their price target on this lithium developer’s shares to $2.00. This follows the release of the definitive feasibility study for its Kathleen Valley project. The broker was pleased with the higher production forecast and the earlier than expected start date. The Liontown Resources share price ended the week at $1.57.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Why Greenland Minerals, Liontown, Nearmap, and Pushpay shares are tumbling lower
• Brokers name 3 ASX shares to buy today
• 2 stellar ASX growth shares that could be strong buys
• Why Liontown, Nearmap, Ramsay, and Xero shares are sinking today
• Liontown Resources (ASX:LTR) share price sinks 9% after Kathleen Valley DFS

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 Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. 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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There are quite a few ASX shares that may still be solid ideas to consider for the long-term, despite the strong run of the ASX share market.

Companies that are expecting to deliver a high level of earnings growth over the next few years may be able to positively surprise investors.

Businesses that are growing across the world may be even more compelling.

Here are two ASX shares to consider:

Webjet Limited (ASX: WEB)

Webjet is one of the leading global travel companies.

The company is still being impacted by COVID-19 effects, but it’s expecting to return to profitability as domestic and international travel resumes.

With WebBeds, the business to business part of the company, it has an ongoing transformation strategy to emerge as the global number one provider.

Webjet believes it’s going to achieve positive operating cashflow in the first half of FY22 after reducing costs and becoming more efficient.

Management think the company is on track to be at least 20% more cost-efficient at scale, suggesting a “significant” leverage opportunity. When markets normalise, Webjet says that WebBeds will have greater market share, lower costs and improved profitability.

Previously, Webjet was targeting a Webjet earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50%. But now management think that it can reach a 62.5% margin because of those cost savings.

The ASX share also believes that it can take increasing domestic market share, with a growing presence by its online travel agency (OTA) segment. Its advantages include the accelerating structural shift to online and a “superior” technology offering. It now has a 11.3% market share, up from 5.6% in April 2020.

Australia’s domestic and international borders are now opening up, opening the gates to more volume.

It’s currently rated as a buy by UBS, with a price target of $6.85.

Doctor Care Anywhere Group PLC (ASX: DOC)

Doctor Care Anywhere is a UK-based telehealth business that wants to provide the best care possible through digitally-enabled, joined up, evidence-based pathways with its platform. It works with health insurers, healthcare providers and corporate customers.

The business continues to scale quickly.

Last month it released its quarterly numbers for the three months to 30 September 2021.

It said that revenue grew quarter on quarter by 21.6% to £5.8 million. This was driven by 30.6% quarter on quarter growth of consultations to 116,800. A record 41,000 patients had their first ever Doctor Care Anywhere consultation during the quarter, while more than 65% of consultations were delivered to returning patients.

There was also continued progress in joining up patient pathways, with 5,100 patients completing the secondary care diagnostic pathway – this was growth of 54.5%.

The ASX share is working on overseas expansion. It has completed the acquisition of Australian tele-health and tele-mental provider, GP2U Telehealth.

Doctor Care Anywhere has also entered the self-pay market in the Republic of Ireland through channel partner Boots.

Management expect that the company can grow its FY21 revenue by at least 100% compared to FY22. Its financial year lines up with the calendar year.

Doctor Care Anywhere says that not only is its solution more convenient for patients, but it is also demonstrating value for doctors and insurers by removing inefficiencies and reducing costs throughout the patient journey, The company is expecting higher profit margins as the pandemic effects ease on the UK clinical workforce.

Taking steps to improve profit margins above pre-COVID levels remains a “key focus” for the company.

The post 2 ASX shares that may be too good to ignore appeared first on The Motley Fool Australia.

More reading

• The Webjet (ASX:WEB) share price was $12 before COVID-19 hit. Can it ever get back there?
• These are the 10 most shorted ASX shares
• Here’s why travel shares led the ASX 200 on Monday
• Here are the top 10 ASX shares today
• Why is the Webjet (ASX:WEB) share price taking off on Monday?

Motley Fool contributor 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 has recommended Doctor Care Anywhere Group PLC. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC. 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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