Goldman Sachs says these small cap ASX shares are buys

If you’re looking for new investment options at the small side of town, then Goldman Sachs has your back.

Listed below are a couple of small cap ASX shares that it recently put buy ratings on. Here’s what you need to know about them:

Adairs Ltd (ASX: ADH)

The first small cap ASX share that Goldman Sachs is tipping as a buy is Adairs.

It is the leading furniture and homewares retailer behind the Adairs, Focus on Furniture, and Mocka brands.

Goldman currently has a buy rating and $3.05 price target on its shares. It likes the company due to its loyal customer base and store expansion opportunity. It commented:

The core Adairs business has a highly loyal customer base, and ongoing store roll-out opportunity: ADH is has a strong brand presence across Australia, a highly engaged and loyal customer base (>1mn Linen Lover members), and ongoing opportunity to roll out new and upsized stores. […] Attractive valuation and high dividend yield: we view valuation as undemanding with ADH trading on 6.9x FY23E P/E

Temple & Webster Group Ltd (ASX: TPW)

Another small cap ASX share that Goldman likes is Temple & Webster.

Despite the company being an online rival to Adairs, the broker remains positive on both.

It currently has a buy rating and $7.55 price target on its shares. Goldman likes Temple & Webster due to its leadership position in a market that is in the process of shifting online. Its analysts explained:

We believe the business has a material runway for long-term growth, supported by a large and growing TAM driven by increasing e-commerce penetration which still lags other comparable markets (Aus 16% vs. UK/US 28%/25%), even after a large pull forward in online sales over the last 2-3 years. […] We believe TPW can deliver long term structural growth, despite a slowdown in the near term macro environment.

The post Goldman Sachs says these small cap ASX shares are buys appeared first on The Motley Fool Australia.

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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. has positions in and has recommended ADAIRS FPO and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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