3 small cap ASX shares to watch in 2021

Booktopia Group Ltd (ASX:BKG) and these ASX small cap shares could be the ones to watch in 2021. Here’s why…

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As I’m a big fan of small cap shares, I feel quite fortunate to have a large number to choose from on the Australian share market.

Three small cap ASX shares that stand out from the rest and could have bright futures are listed below. Here’s what you need to know about them:

Booktopia Group Ltd (ASX: BKG)

Booktopia is an online book retailer which has been growing very strongly. It has been a very positive performer so far in FY 2021. This has been driven by both the shift to online shopping and its investment in a new distribution centre.

The latter allowed the company to take advantage of increased demand by shipping more books than ever during December. This led to Booktopia shipping a total of 4.2 million units for the first half, up 40% on the prior corresponding period.

In respect to its financials, this underpinned a 51.1% increase in revenue to $112.6 million and a 502.3% jump in underlying EBITDA to $8 million.

MNF Group Ltd (ASX: MNF)

Another small cap ASX share to look at is MNF Group. It is a leading provider of Voice over Internet Protocol technology (phone calls over the internet) to businesses and consumers.

It has also been performing strongly in FY 2021. Last month the company released its half year results and delivered a 15% increase in recurring revenue to $55.7 million. This was driven by strong growth in new numbers and a Net Revenue Retention of 115%. The latter means the company’s existing customers are not just sticking around, they are spending more.

Pleasingly, management is positive on the future. This is thanks to the structural tailwinds it is experiencing and its expansion into the Asia market.

Universal Store Holdings Limited (ASX: UNI)

A final small cap to watch is Universal Store. It is a fashion retailer which delivers a carefully curated selection of on-trend products to a target 16-35 year old fashion focused customer.

As with the others, Universal has been a positive performer during the pandemic and reported impressive growth during the first half of FY 2021.

For the six months ended 31 December, Universal Store delivered a 23.3% increase in sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million. This was driven by strong online and like for like store growth.

Positively, the second half has started strongly, putting the company in a position to deliver a bumper profit result in August.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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