As well as being home to countless blue chip shares, the Australian share market is home to a good number of promising small caps.
Two small cap shares that could be deserving of a spot on your watchlist are listed below. Here's what you need to know about them:
MNF Group Ltd (ASX: MNF)
MNF Group is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers. This technology essentially allows telephone calls to be made over the internet. Due to the NBN rollout and the work from home initiative, demand for MNF's VoIP services has been growing strongly this year. This led to the company recording a 27% increase in recurring revenue to $101.5 million in FY 2020.
Another positive was that it reported a 17% increase in phone numbers on its network to 4.5 million. Management notes that this metric is a key performance indicator for future growth, which bodes well for its performance in FY 2021.
One broker that is confident in the company's prospects is Morgan Stanley. Late last month its analysts put an overweight rating and $6.30 price target on its shares. This compares to its last close price of $4.96.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is the New Zealand-based healthcare technology company behind the VolparaEnterprise software solution. This product is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services. In addition to this, the company has a growing number of add-on solutions that work with VolparaEnterprise. These include VolparaDensity, VolparaDose, VolparaPressure, VolparaLive, and VolparaPositioning.
Management expects these add-ons to drive material average revenue per user (ARPU) growth in the future. At the end of the second quarter, its ARPU stood at US$1.16. But management is aiming to grow it to US$10 in the future for its full product suite. Together with market share gains and potential geographic expansion, management appears confident that it is well-placed for growth.
One broker that agrees is Morgans. At the end of last month it put an add rating and $1.71 price target on the company's shares. The Volpara share price ended the week at $1.32.
