If you’re looking for outsized returns, then the small cap side of the market could be worth a look.
This is because there are a number of small caps that could generate very strong returns for investors over the 2020s if they live up to their potential.
Two small cap ASX shares that are highly rated are listed below. Here’s what you need to know about them:
Bigtincan Holdings Ltd (ASX: BTH)
The first small cap to look at is this provider of an artificial intelligence-powered sales enablement automation platform.
Sales enablement may not be a term that many readers are overly familiar with. However, it is simply a platform that enables sales teams to function more efficiently and deliver better results.
Clearly the platform works, as Bigtincan continues to experience strong demand from some of the biggest companies in the world.
The company has also been making bolt-on acquisitions which have improved its offering and strengthened its position in particular industries.
A combination of the benefits of acquisitions and organic growth led to the company reporting annualised recurring revenue (ARR) of $48.4 million at the end of December. This was a 50% increase over the prior corresponding period.
Morgan Stanley is a fan of the company. It currently has an overweight rating and $1.40 price target on its shares.
Booktopia Group Ltd (ASX: BKG)
Another small cap to watch is this online book retailer.
Like Bigtincan, it has been growing very strongly in FY 2021. This has been driven by the shift online and improvements in its distribution capabilities.
For example, during the first half of FY 2021, the company reported a 40% jump in shipments to a total of 4.2 million units. This ultimately led to Booktopia reporting a 51.1% increase in revenue to $112.6 million and a whopping 502.3% jump in underlying EBITDA to $8 million.
Analysts at Morgans are fans of the company and believe it is well-placed for further growth. They currently have an add rating and $3.53 price target on its shares.
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More reading
- 2 rapidly growing small cap ASX shares to watch
- 3 excellent small cap ASX shares to watch closely
- 3 exciting small cap ASX shares to watch
- Why the Booktopia (ASX:BKG) share price is climbing today
- 2 quality small cap ASX shares rated as buys
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 recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Booktopia Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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