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Looking for the next Afterpay and Zip? Try these small cap ASX shares

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If you’re on the lookout for the next Afterpay Ltd (ASX: APT) or Zip Co Ltd (ASX: Z1P) success story, then you might want to scour the small side of the market.

At this side of the market, there are a number of quality shares that have enormous potential. Here are a couple to watch:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap share to look at is Bigtincan. Its sales enablement software platform provides businesses with the information, content, and tools to sell more effectively.

Demand for the company’s platform has been growing strongly in recent years and continued to do so during the pandemic. This led to it recording strong recurring revenue growth in FY 2020.

Positively, Bigtincan has continued its strong growth in FY 2021. So much so, it is expecting to achieve the top end of its annualised recurring revenue (ARR) guidance range of $49 million to $53 million in FY 2021. This will be up 48% from FY 2020’s ARR of $35.8 million.

One broker that is particularly positive on the company is Morgan Stanley. It has an overweight rating and $1.40 price target on its shares. Limited (ASX: MYD)

Another small cap to watch is It is an online retail marketplace provider that has a focus on furniture, homewares, appliances, technology, baby products, and hardware.

It has also been a strong performer so far in FY 2021. For example, in February it released its half year results and revealed a 217% increase in gross sales to $126.7 million. This was driven by increased repeat purchases and a rise in its active customers to 813,764.

Looking ahead, the company appears well-placed for long term growth thanks to the ongoing shift to online shopping. This should be supported by the expansion of its higher margin private label range.

Morgans sees a lot of value in its shares at the current level. The broker currently has an add rating and $1.70 price target on its shares.

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 BIGTINCAN FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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