3 stellar small cap ASX shares for your watchlist

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The Australian share market is home to a good number of promising small caps that have the potential to grow strongly over the 2020s.

Three that could be worth watching closely are listed below. Here's what you need to know about them:

Adore Beauty Group Ltd (ASX: ABY)

The first small cap to watch is Adore Beauty. It is Australia's leading online beauty retailer with ~700,000 active customers. While the company has been growing very strongly during the pandemic, it still has a very long runway for growth. This is due to the relatively low penetration of online beauty sales relative to other Western markets and categories. This puts Adore Beauty in a great position to continue growing strongly in a post-pandemic world.

Over The Wire Holdings Ltd (ASX: OTW)

Over The Wire could be another small cap to watch closely. It is a telecommunications, cloud and IT solutions provider that has a national network with points of presence in all major Australian capital cities. The company offers an integrated suite of products and services to business customers including Data Networks and Internet, Voice, Data Centre co-location, Cloud and Managed Services. It recently released its full year results and revealed a 38% increase in recurring revenue to $103.2 million and a 35% lift in EBITDA to $23.5 million.

Serko Ltd (ASX: SKO)

A final small cap share to watch is Serko. It is a travel technology company that offers a number of solutions to businesses. These include AI-powered end-to-end travel itineraries, cost control, travel policy compliance solutions, and fraud prevention. Combined, its technology makes the process of booking, managing and reconciling business travel and expenses, a better experience for everyone involved. Demand for its offering softened during the pandemic but is rebounding strongly now. This will be supported by a game-changing deal with travel booking giant Booking.com in FY 2022.

Motley Fool contributor 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 Over The Wire Holdings Ltd and Serko Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Over The Wire Holdings Ltd and Serko Ltd. 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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