2 must-watch small cap ASX shares

MNF Group Ltd (ASX:MNF) and this small cap ASX share should be on your watchlist. Here’s why…

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At the small end of the market, there are a number of ASX shares with the potential to grow strongly in the future.

Two that should be on your watchlists are listed below. Here’s what you need to know about them:

MNF Group Ltd (ASX: MNF)

The first small cap ASX share to watch is MNF Group. It specialises in Voice over Internet Protocol (VoIP) technology, which converts analogue audio into digital data that can be transmitted over the internet. This technology is used to support services like teleconferencing, online business meetings, and digital data transfers.

MNF looks well-placed for growth over the long term thanks to a number of favourable tailwinds. These include the NBN rollout and the work from home initiative.

In addition to this, when MNF released its half year results in February, management revealed plans to expand into the Asian market. At that point, it was on the cusp of entering Singapore and was looking at a further six markets in the region.

If these expansions are a success, then they could be a big boost to its recurring revenues, which are growing fast. For example, at the end of December, recurring revenues had increased 15% to $55.7 million.

Morgan Stanley is a fan of the company. It currently has an overweight rating and $6.30 price target on its shares.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX share to watch is Volpara. It is the healthcare technology company behind the VolparaEnterprise software solution. This is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services.

This software has resonated extremely well with radiologists, leading to consistent market share gains in the US breast screening market over the last few years. In fact, at the end of the third quarter of FY 2021, Volpara reported that its software was used in over 27% of screenings for women in the United States.

The company also has a number of complementary solutions that work alongside VolparaEnterprise. These add-ons are expected to drive a significant increase in average revenue per user (ARPU) in the future.

Morgans is positive on Volpara. It currently as an add rating and $1.94 price target on its shares.

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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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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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