If you’re wanting to invest in the small side of the Australian share market, then the two small caps listed below could be worth a closer look.
Analysts believe they could have very bright futures and are tipping them as buys. Here’s why they could worth adding to your watchlist:
Booktopia Group Ltd (ASX: BKG)
The first small cap ASX share to look at is Booktopia. It is an online book retailer which was supposed to struggle when Amazon launched in Australia. Pleasingly for investors, that simply hasn’t been the case. For example, during the first half of FY 2021, the company shipped a total of 4.2 million units for the six months.
This was up 40% on the prior corresponding period and led to Booktopia reporting a 51.1% increase in revenue to $112.6 million and a 502.3% jump in underlying EBITDA to $8 million. It then followed this up with further strong growth in the third quarter, leaving it well-placed to deliver a very strong full year result next month.
Analysts at Morgans appear confident this positive form will continue. The broker is also expecting further market share gains and scale benefits. In light of this, it currently has an add rating and $3.54 price target on its shares.
Another small cap ASX share to watch is Serko. It is an online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. The Zeno Travel platform provides corporate customers with AI-powered end-to-end travel itineraries, cost control and travel policy compliance. Whereas the Zeno Expense platform lets users automate and streamline their expense administration function, identify out-of-policy expense claims, and prevent fraud.
Given the impact that COVID-19 has had on travel markets, it will come as no surprise to learn that its performance has been impacted. However, demand has been improving and is expected to continue doing so as travel markets recover. This will be supported by its game-changing deal with travel giant Booking.com, which has the potential to be a significant boost to revenues in FY 2022.
Management commented: “The new Booking.com for Business platform is now being rolled out globally as additional languages and regional content are added. As previously announced, subject to the recovery in relevant markets, the partnership is expected to make a material contribution to revenues in the 2022 financial year.”
Macquarie is positive on the company due to its world class technology. It has an outperform rating and NZ$8.31 (A$7.87) price target on its shares.