2 exciting small cap ASX shares to watch

These small cap ASX shares 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:

Booktopia Group Ltd (ASX: BKG)

Booktopia is an online book retailer which has been performing particularly strongly this year.

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 Booktopia to deliver a record 4.2 million shipments for the period, up 40% over the prior corresponding period.

Positively, the company followed this up with further strong growth in the third quarter, setting it up to deliver a stellar full year result in August.

Morgans is positive on the company. It is tipping further market share gains and scale benefits in the coming years. The broker currently has an add rating and $3.53 price target on its shares.

MNF Group Ltd (ASX: MNF)

MNF specialises in Voice over Internet Protocol (VoIP) technology which is used to support services like teleconferencing, online business meetings, and digital data transfers.

Thanks to a number of favourable tailwinds such as the NBN rollout and the work from home trend, MNF looks well-placed for growth over the long term.

This should be supported by its expansion into the Asian market. Last week it revealed that is on the verge of launching in Singapore. It is also looking at future expansions into other markets in the region.

In the meantime, the company is on course to record a solid result in FY 2021. Last week it advised that it is on target to achieve the top end of its earnings guidance. This guidance is for operating earnings of $40 million to $43 million for the 12 months ended 30 June.

Morgan Stanley is a fan of the company. It currently has an overweight rating and $6.30 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 has recommended MNF Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group 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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