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Could these microcap ASX shares be the next A2 Milk (ASX:A2M)? 

Broken fortune cookie with note stating 'next big thing' representing growth ASX shares
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An investors dream is to find the next A2 Milk Company Ltd (ASX: A2M) in its early days. Here are two microcap ASX shares in the health food and dairy spaces that I think could become giants in the future.

2 ASX shares with huge growth potential

1. Pure Foods Tasmania Ltd (ASX: PFT) 

Pure Foods Tasmania was formed in 2015 with the aim to acquire, grow and develop premium food businesses in Tasmania. The company has a market capitalisation of $42 million with two acquired businesses and a third acquisition in progress. 

The two already acquired businesses are Tasmania Pâté and Woodbridge. Tasmania Pâté is one of Australia’s largest pâté businesses and a supplier to large retail outlets including Costco Wholesale Corporation (NASDAQ: COST), Aldi and Woolworths Group Ltd (ASX: WOW). Woodbridge is a boutique producer of ultra-premium Tasmania smoked salmon and trout with over 60% of its products exported to Asian markets and sold to high-end food service retailers throughout Australia. Finally, earlier this month, Pure Foods announced it is acquiring Daly Potato Company, a producer of premium potato salads which are sold to major supermarket chains. 

In FY20, the company delivered a 13% increase in revenue to $4.27 million, a net loss of $196,500 and $4.13 million in cash as at 30 June. The company plans to target the plant-based cheese market which is forecasted to reach $3.9 billion by 2024. It will launch new, Tasmanian plant-based dairy products into national, independent, direct-to-consumer and export retail channels. Furthermore, the company recently launched its new online store which aims to provide a hub for consumers around Australia looking for premium products from Tasmanian producers. The Pure Foods share price has surged 268% in year-to-date trading. Interestingly, some of the original shareholders of Bellamy’s are also the founders of Pure Foods. Its experienced founders could see this ASX share continue to outperform.  

2. Wide Open Agriculture Ltd (ASX: WOA) 

Wide Open Agriculture offers regeneratively grown animal and plant-based products to Australian and Asian markets. This means that it grows plants and raises animals on farms that regenerate the land – bringing new life to soil health, plants, wildlife and waterways. Its products are therefore free of chemicals and pesticides, high quality and locally sourced with a short, transparent supply chain. The company currently has a market capitalisation of $89 million.

In FY20, the company generated $2.2 million in revenue and a loss of $1.85 million. Its products are currently only sold in Western Australia with limited marketing and a large opportunity to penetrate new domestic territories and launch globally. Wide Open Agriculture believes it has a first mover advantage in the production of lupin-based protein that can be used to create alternative meat, dairy, beverage and convenience food products. 

Moving forward, the company is looking to increase its revenue by penetrating into new domestic markets, expanding its product offering online and exporting to Asian markets. Furthermore, it aims to launch its own new products in lupin protein and build a manufacturing capability to produce oat milk. I believe the company is in its early days with a significant revenue opportunity at hand. The Wide Open Agriculture share price has increased more than 700% year to date but the company’s ability to operationally execute and grow revenues could see its share price run continue well into the future.

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

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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’.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Costco Wholesale. The Motley Fool Australia owns shares of A2 Milk and Woolworths Limited. 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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