While small cap shares carry a lot more risk than blue chips, the potential returns on offer are vastly superior. This could make it well worth having a little exposure to this side of the market if your risk tolerance allows.
But which small caps should you be looking at? Two to get better acquainted with are as follows:
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Mach7 Technologies Ltd (ASX: M7T)
The first small cap ASX share to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. This helps users with their diagnoses, reduces costs, and improves outcomes.
The company has been growing at a solid rate over the last couple of years thanks to strong demand and the acquisition of Client Outlook for A$40.9 million in June last year. The acquisition of the leading provider of an enterprise image viewing technology has both expanded its offering and also its addressable market considerably.
Management estimates that the company now has a US$2.75 billion market opportunity to grow into. This is significantly more than the total contract value (TCV) of $12.84 million Mach7 generated during the third quarter.
Analysts at Morgans are very positive on the company's prospects. The broker believes that its solutions are well-placed in the current environment, especially with demand for telehealth growing fast. Morgans currently has an add rating and $1.68 price target on Mach7's shares.
Whispir Ltd (ASX: WSP)
Another small cap to look at is Whispir. It is a technology company providing businesses with a communications workflow platform that automates interactions between organisations and people. This platform helps businesses of all sizes eradicate communication inefficiencies and redundancies so that their staff and clients can connect in new and productive ways.
Demand continues to grow for Whispir's platform and is underpinning solid recurring revenue growth. In fact, its third quarter update revealed further growth in this key metric. As of 31 March, the company's Annualised Recurring Revenue (ARR) was up 20.3% over the prior corresponding period to $50.3 million. This was also up 5.2% since the end of the second quarter.
Ord Minnett is a fan of the company. Its analysts have a buy rating and $4.25 price target on its shares.
