Motley Fool Australia

3 very exciting small cap ASX shares to watch

ASX share price on watch represented by surprised man with binoculars
Image source: Getty Images

Are you a fan of small cap shares? If you are, the good news is that there are a number of promising companies at the small side of the Australian share market.

Three that you might want to look closely at are listed below. Here’s what you need to know about them:

Damstra Holdings Ltd (ASX: DTC)

The first ASX small cap share to watch is Damstra. It is a growing integrated workplace management solutions provider. Its cloud-based workplace management platform is used by businesses globally to track, manage, and protect their workers and assets. Demand has been growing strongly in recent years and has continued in FY 2021. For example, it recently released its second quarter update. Over the three months, Damstra delivered a record quarter for revenue and cash receipts. Key drivers of its growth were a 49% jump in user numbers to 623,000, the doubling of its client numbers to 670, and its low churn level of <0.5%. Management believes this validates its recent acquisitions. 

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is an online retail marketplace. Thanks to the shift to online shopping, which has accelerated because of the pandemic, the company has been growing very strongly over the last 12 months. This certainly has been the case in FY 2021. MyDeal recently revealed that it first half gross sales increased 217% over the same period last year to $126.7 million. This was driven by a strong increase in active customers to a record 813,764 and repeat use. Looking ahead, the company appears well-placed for growth thanks to growing online spending and the $40 million it raised from its IPO. These funds will be used to drive future growth. This includes growing its private label business and investing in advertising to grow its customer base and brand.

Nitro Software Ltd (ASX: NTO)

A third and final small cap ASX share to watch is Nitro Software. It is a growing software company driving digital transformation in businesses around the world across multiple industries. The company’s key solution is the Nitro Productivity Suite. This solution provides businesses with integrated PDF productivity and electronic signature tools via a software-as-a-service and desktop-based software solution. Demand for its offering has been stronger than expected in FY 2020, leading to management recently upgrading its guidance. Nitro expects its subscription ARR to come in at $26 million to $27 million in FY 2020. This compares to the $24.4 million ARR it guided to in its IPO prospectus.

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 February 15th 2021

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 Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd and Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…

Latest posts by James Mickleboro (see all)