If your risk profile allows it, having a few small cap shares in a balanced portfolio could be worth considering. Especially given the potential returns on offer if you can find the next Afterpay Ltd (ASX: APT) or Altium Limited (ASX: ALU).
But which ASX small caps should you be looking at? Here are a couple of small cap ASX shares that have been tipped as buys:
Audinate Group Limited (ASX: AD8)
The first small cap share to look at is Audinate. It is a digital audio-visual networking technologies provider best known for its industry-leading Dante audio over IP networking solution.
This product is used widely across a number of industries and has begun to dominate its market. In fact, at the last count, the number of Dante enabled products manufactured by its customers had grown to 2,804. This is a massive eight times greater than its nearest rival, Cobranet.
One broker that is bullish on Audinate is Morgan Stanley. Earlier this month it put an overweight rating and $9.00 price target on the company's shares. This compares to the latest Audinate share price of $7.64.
The broker notes that Audinate has had a record-breaking second quarter. Which is all the more impressive given how many of its customers are still struggling with significant COVID headwinds.
Serko Ltd (ASX: SKO)
Another small cap to look at is Serko. It is an online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. Combined, these products provide travel bookers and businesses with AI-powered end-to-end travel itineraries, cost control, travel policy compliance, expense administration, and fraud prevention.
The last 12 months have unsurprisingly been very tough for the company, but with travel markets starting to recover now, its transaction volumes have begun to improve. For example, in December a trading update revealed that its November transaction volumes increased to 44% of pre-pandemic levels.
With domestic borders reopening, COVID-19 vaccines being rolled out, and its new Booking.com deal coming into effect, management appears optimistic that transaction volumes will continue to improve over the coming months.
Ord Minnett currently has a buy rating and $6.55 price target on the company's shares. It appears particularly optimistic on the Booking.com deal driving long term growth.
