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:
Image source: Getty Images
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.
