2 small cap ASX shares that are growing quickly

City Chic and Volpara are two small cap ASX shares that are growing rapidly.

| More on:
A man stands with arms crossed in front of a giant shadow of a body builder representing ASX small-cap stocks.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Small cap ASX shares can grow quicker than larger businesses because they're simply starting from a smaller base.

Some businesses are growing both organically and with acquisitions, combining into a fast pace of growth:

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a small cap ASX share that specialises in providing breast imaging software and practice administration. It's increasing its capabilities in relation to patient risk with the acquisition of CRA Health.

The business has been working on making itself more scalable with digital marketing through its "smarter" use of cloud services through software systems that are easier to deploy into clinics.

FY21 saw Volpara's full year revenue increase by 57% to NZ$19.7 million. Subscription revenue increased 99% to NZ$18.1 million, which included a 20% organic year on year increase.

The company estimates it now has at least one software product being used in the screening of approximately 32% of US women for breast cancer.

Volpara said in FY21 its annual recurring revenue (ARR) increased 55% to NZ$27.9 million and the gross profit margin improved from 86% to 91%.

The small cap ASX share continues to see a low level of customer churn, increased average revenue per user (ARPU), new customers, upselling to existing customers and potential acquisitions provide with technology for the future.

City Chic Collective Ltd (ASX: CCX)

City Chic is looking to create a 'world of curves' as a global retailer of plus-size clothing, footwear and accessories for women.

It now has a number of different brands and retailers in different markets. Locally, it has the City Chic business. In the UK it recently acquired the Evans business. In the US it has the Avenue business. City Chic also has online intimate brands Hips & Curves and Fox & Royal.

City Chic was already selling a large amount of products online before the pandemic, but it has accelerated further on the last 12 months. In the first six months of FY21, 42% of sales were done online.

HY21 also saw 20.8% of comparable sales growth excluding Victorian store closures. Total sales rose 13.5% to $119 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 21.8% to $23.3 million with the EBITDA margin increasing from 18.2% to 19.6%.

Statutory net profit after tax (NPAT) rose 24.8% to $13.1 million and operating cashflow increased 25.7% to $21.5 million.

Growth has continued in the first eight weeks of the second half of FY21. City Chic said it has continued to deliver "strong positive comparable sales growth".

The small cap ASX share now is focused on a few different things.

It's integrating Evans and the introduction of a wider range of products and lifestyles. City Chic is continuing to execute on the re-engagement strategy of the Avenue customer base. It's looking to introduce a conservative product stream to Australia and New Zealand. City Chic is looking to expand in the UK and Europe. In Australia it's rotating its store portfolio into new fit-outs and conversion to larger format stores.

Motley Fool contributor Tristan Harrison 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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and 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.

More on Small Cap Shares

A young man wearing a black and white striped t-shirt looks surprised.
Small Cap Shares

Why this ASX small cap stock could rocket 60%

Bell Potter sees huge upside potential from this small cap.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Kid putting a coin in a piggy bank.
Small Cap Shares

7 ASX small-cap shares that are cheaper than the ASX 200 in March 2024

Could it be time to back the underdogs of the ASX amid a potentially richly-valued benchmark?

Read more »

Three young people in business attire sit around a desk and discuss.
Small Cap Shares

3 ASX penny stocks I don't think will be below 80 cents much longer

These sub-dollar shares are all capable of smashing through to another level, say experts.

Read more »

Kid on a skateboard with cardboard wings soars along the road.
Small Cap Shares

Want to make big returns? ASX small-cap shares are poised to outperform

Smaller businesses could be compelling investments today, according to an expert.

Read more »

The Two little girls smiling upside down on a bed.
Small Cap Shares

Where I'd invest $5,000 into ASX small-cap shares aiming for big growth

I love the potential of how big these small stocks could become.

Read more »

A young woman makes an online travel booking as she sits on some steps with her suitcase next to her.
Opinions

I think this ASX small-cap share can soar in 2024

This stock could keep travelling higher over time.

Read more »

Three young people in business attire sit around a desk and discuss.
Opinions

3 reasons why I'd buy small-cap shares over ASX blue chips in 2024

I’m excited by the potential of small stocks.

Read more »