3 exciting small cap ASX shares to watch in May

Booktopia Group Ltd (ASX:BKG) and these small cap ASX shares could be the ones to watch right now. Here’s why…

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As I’m a fan of small cap shares, I feel quite fortunate to have a large number to choose from on the Australian share market.

Three small cap ASX shares that stand out from the rest and could have bright futures are listed below. Here’s what you need to know about them:

Booktopia Group Ltd (ASX: BKG)

The first small cap ASX share to watch is Booktopia. It is an online book retailer which has been in fine form this year. For example, during the first half of FY 2021, the company reported a 51.1% increase in revenue to $112.6 million and a 502.3% jump in underlying EBITDA to $8 million. This was driven by the shift to online shopping and its new distribution centre. The latter allowed the company to take advantage of the increased demand by shipping more books than ever before. Positively, its strong form has continued since then. Last month it released its third quarter update and revealed a 53% increase in quarterley revenue.

Earlier this week, Morgans retained its add rating and lifted its price target to $3.54.

Nitro Software Ltd (ASX: NTO)

Nitro Software is another small cap ASX share to watch. It is a software company that is aiming to drive digital transformation in businesses around the world. Its main solution is the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers through a horizontal, software-as-a-service, and desktop-based software solution. Nitro counts a number of the largest companies in the world as customers. This is a testament to the quality of its offering.

Morgan Stanley has an overweight rating and $3.70 price target on the company’s shares.

Universal Store Holdings Limited (ASX: UNI)

Universal Store is a fashion retailer which aims to deliver an ever-changing and carefully curated selection of on-trend products. Its strategy has been highly successful, helping Universal Store deliver a stellar half year result in February. For the six months ended 31 December, Universal Store reported a 23.3% increase in sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million. As with Booktopia, this has continued in the third quarter. It recently reported a 39.6% increase in quarterly sales.

This went down well with analysts at Morgans. The broker currently has an add rating and $8.37 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. recommends Booktopia Group Limited. The Motley Fool Australia has recommended Nitro Software Limited. 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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