Motley Fool Australia

3 quality small cap ASX shares with very strong growth potential

miniature rocket breaking out of golden egg representing rocketing bbx share price
Image source: Getty Images

Small cap shares traditionally carry a lot more risk than their large cap counterparts.

However, if you focus on companies with proven business models, positive outlooks, and strong business traction, I believe you can reduce this risk materially.

Three small cap ASX shares which tick a lot of boxes for me at present are listed below. Here’s why I think they are worth watching:  

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap ASX share to look at is Bigtincan. It is a provider of sales enablement software which provides businesses with the information, content, and tools to sell more effectively. Demand for its platform has been growing strongly in recent years and even during the coronavirus crisis. This led to it recording strong recurring revenue growth in FY 2020 and guiding to more of the same in FY 2021.

MNF Group Ltd (ASX: MNF)

Another small cap ASX share I’m a fan of 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. Demand for VoIP services has been growing very strongly this year because of the work from home initiative. The good news is that I don’t believe this is a one-off. I’m confident the pandemic has accelerated a structural shift that MNF Group is in pole position to benefit from. 

People Infrastructure Ltd (ASX: PPE)

A final option to look at is People Infrastructure. It is a leading workforce management company that provides innovative solutions to workforce challenges. Despite being impacted by the pandemic, People Infrastructure was a positive performer in FY 2020. It reported normalised EBITDA of $26.4 million, up 49.2% on the prior corresponding period. And while it hasn’t been able to provide guidance for FY 2021, management remains focused on driving growth both organically and inorganically.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

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 owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO and People Infrastructure Ltd. 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.

Related Articles...