Due to the strong potential returns on offer at the small side of the market, having a little exposure to it could be a good thing for a portfolio.
With that in mind, I have picked out two small cap ASX shares that have been named as buys. They are as follows:
MNF Group Ltd (ASX: MNF)
MNF Group is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers.
Its technology allows users to make telephone calls over the internet. Which, with the NBN rollout removing traditional telephone lines, is an increasingly important service.
MNF has been growing its recurring revenue at a solid rate for a number of years. This has continued in FY 2021, with first half recurring revenues increasing 15% to $55.7 million.
Positively, MNF look well-placed to continue this trend in the coming years. This is thanks to structural tailwinds and its expansion into Asia.
With its half year results, management advised that it is close to launching in Singapore and is looking into entering a further six markets in the region.
Morgan Stanley is positive on the company. It currently has an overweight rating and $6.30 price target on its shares.
SILK Laser Australia Limited (ASX: SLA)
SILK Laser is a growing laser, skin care, and cosmetic injections company.
Last month SILK released its half year results and revealed that its growth has continued despite the pandemic.
For the six months ended 31 December, SILK reported a 62% increase in network sales to $44.9 million, a 78% lift in revenue to $30.6 million, and a 305% jump in net profit to $4.7 million.
Underpinning this growth was strong like for like sales and the addition of four new clinics. This brought SILK’s network to a total of 56 clinics across the country. Pleasingly, this is still well short of its current target of 150 clinics, which gives it a long runway for growth.
Macquarie is a fan of the company. It currently has an outperform rating and $9.50 price target on its shares.
Where to invest $1,000 right now
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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
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.