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3 ASX small cap shares you must add to your watchlist

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Are you looking for some small cap ASX shares to add to your watchlist? Then I would highly recommend you take a look at the ones listed below.

Here’s why I think they have a lot of potential and are worth keeping a close eye on:

Avita Medical Ltd (ASX: AVH)

The first small cap ASX share to watch is Avita Medical. It is the global regenerative medicine company behind the exciting Recell system. This system allows healthcare professionals to produce a suspension of Spray-On Skin Cells using a small sample of the patient’s own skin. This suspension contains the cells necessary to regenerate the outer layer of natural, healthy skin and is prepared and applied at the point-of-care in as little as 30-minutes. While the company has a huge market opportunity already, it is seeking to extend Recell’s use to treat vitiligo. If successful, combined, the company will have a significant runway for growth over the next decade.

Over The Wire Holdings Ltd (ASX: OTW)

Another small cap to look at is Over The Wire. It is a telecommunications, cloud, and IT solutions provider which has been growing at a solid rate in recent years. For example, in FY 2020, the company delivered revenue of $87.6 million, up 10% on the prior corresponding period. I expect more of the same from the company in FY 2021 and beyond. Especially given its recent acquisition of Digital Sense Hosting for $27 million. It is a high-quality cloud business that provides a customisable and scalable cloud offering to Enterprise and Government customers.

Readytech Holdings Ltd (ASX: RDY)

Finally, I think ReadyTech is another small cap to add to your watchlist. It is a leading provider of mission-critical people management software for educators, employers, and facilitators of career transitions. Management notes that its software represents a new way to manage the complex human journey through study, work, and career transitions. Demand has been growing for its software, leading to ReadyTech delivering a 19.1% increase in revenue to $39.3 million in FY 2020.

Where to invest $1,000 right 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.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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 Avita Medical Limited, Over The Wire Holdings Ltd, and Readytech Holdings Ltd. The Motley Fool Australia has recommended Avita Medical Limited, Over The Wire Holdings Ltd, and Readytech Holdings 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.

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