If you’re looking for some exposure to the small side of the market, then you might want to take a look at the shares listed below.
I believe they are among the best options for small cap investors and could be destined for big things in the future. Here’s why I believe they are worth watching:
MNF Group Ltd (ASX: MNF)
The first small cap ASX share to look at is MNF Group. It is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers. VoIP technology is used to convert analogue audio signals into digital data so you can use a telephone over the internet. Given the NBN rollout and the work from home initiative, demand for VoIP services has been growing very strongly.
This led to MNF delivering a 27% increase in recurring revenue to $101.5 million in FY 2020. It also experienced a 17% increase in phone numbers on its network to 4.5 million. This bodes well for FY 2021, as this metric is a key performance indicator for future growth. The good news is that I don’t believe this is a one-off. I remain confident the pandemic has accelerated a structural shift that MNF is in a strong position to benefit from. This could make its shares long term market beaters.
Volpara Health Technologies Ltd (ASX: VHT)
Another small cap ASX share to look at is New Zealand-based healthcare technology company, Volpara. It is the company behind the VolparaEnterprise software solution. This product is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services. The company also has other add-on solutions that work with VolparaEnterprise. These include VolparaDensity, VolparaDose, VolparaPressure, VolparaLive, and VolparaPositioning.
It is because of these extra products that management expects its average revenue per user (ARPU) metric to grow materially in the future. In the second quarter, Volpara revealed an ARPU of US$1.16. However, it is aiming to get this to US$10 in the future for its full product suite. Combined with market share gains and potential geographic expansion, I believe the future is very bright for Volpara.
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Returns as of 6th October 2020
More reading
- 3 exciting small cap ASX shares that ought to be on your watchlist
- Volpara (ASX:VHT) share price jumps 5% up after business update
- 3 small cap ASX healthcare shares to watch closely in the 2020s
- Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
- 3 quality small cap ASX shares with very strong growth potential
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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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