If your risk profile allows for it, having a little exposure to the small side of the market could be a good thing for a portfolio.
This is because the potential returns on offer here are significant if you can find a small cap on a pathway to becoming a mid cap or even a large cap.
With that in mind, I have picked out two small caps that are highly rated. They are as follows:
Bigtincan Holdings Ltd (ASX: BTH)
The first small cap ASX to look at is Bigtincan. It is an artificial intelligence-powered sales enablement automation platform provider.
Bigtincan has been growing very quickly in recent years and looks well-placed to continue this trend in FY 2021 following a very strong half year result in February. At the end of the half, its annualised recurring revenue (ARR) stood at $48.4 million. This was a 50% increase over the prior corresponding period.
Driving this strong growth was acquisitions and new customer wins. In respect to the latter, among the growing number of blue chips using its platform are 7 of the top 10 companies on the Fortune 500.
Analysts at Ord Minnett are positive on its prospects. They currently have a buy rating and $1.08 price target on its shares.
Doctor Care Anywhere Ltd (ASX: DOC)
Another small cap ASX share to look at is Doctor Care Anywhere. It is a growing UK-based telehealth company that is aiming to deliver high-quality, effective, and efficient care to its patients, while reducing the overall cost of providing clinical services.
It has also been growing strongly this year. For example, in January it released its fourth quarter update and revealed a 151% increase in revenue to 3.8 million pounds. This was driven by the increasing popularity of telehealth services during the pandemic.
Bell Potter is positive on the company’s long term outlook. It has a buy rating and $1.95 price target on the company’s 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. recommends Doctor Care Anywhere Group PLC. The Motley Fool Australia has recommended BIGTINCAN FPO and Doctor Care Anywhere Group PLC. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.