Brokers name 3 ASX small caps to buy

LiveTiles Ltd (ASX:LVT) shares are one of three in the small cap space tipped as buys…

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ASX Small Caps

One area of the market which I think is well worth having a little exposure to is the small cap space.

After all, small cap shares have vastly outperformed their illustrious peers based on the Small Ordinaries performance over both the last 12 and 24 months.

Three small cap shares that have been given buy ratings from brokers this week are listed below:

LiveTiles Ltd (ASX: LVT)

According to a note out of Citi, the broker has retained its buy rating and lifted its price target on this software company’s shares to a massive $1.14. This price target implies potential upside of over 68% for its shares. Citi believes that this week’s institutional placement means it is well-funded and will allow management to accelerate its growth. This morning LiveTiles announced that it has successfully raised $25 million through a placement and will allow $2 million more to be raised through a share purchase plan. While I agree with Citi on the funds being able to accelerate its growth and think that LiveTiles is an exciting company, I would take its price target with a pinch of salt. Citi is acting as joint lead manager and bookrunner to the placement.

Over The Wire Holdings Ltd (ASX: OTW)

A note out of Morgans reveals that its analysts have retained their add rating and lifted the price target on Over The Wire’s shares by 21% to $4.03. The broker believes the telco and IT services company could be positioned for strong earnings growth thanks to organic growth and further earnings accretive acquisitions. I like the look of Over The Wire and the industry it operates in. Though, with its results on the horizon it might be worth holding out until they are released.

Superloop Ltd (ASX: SLC)

Analysts at Morgans have also retained their add rating and lifted the price target on Superloop’s shares to $2.86. Although the broker expects Superloop to only deliver a full-year result in-line with expectations, it continues to see more value in the telecommunications infrastructure company’s assets than the market has priced in. I think that Morgans makes a great point on Superloop and it could be worth taking a closer look.

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*Returns as of May 24th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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