The small end of the Australian share market is home to a number of companies with the potential to grow materially in the future.
Two small cap shares that investors might want to get better acquainted with are listed below. Here's why they are highly rated by these brokers:
Booktopia Group Ltd (ASX: BKG)
The first small cap share to watch is rapidly growing online book retailer, Booktopia.
Thanks to the shift to online shopping, and the company's new automated distribution centre, Booktopia was a very strong performer in FY 2021. It reported a 35% lift in revenue to $223.9 million and a 125% jump in underlying EBITDA to $13.6 million.
Also growing strongly was its active customers. At the end of the period, the company had a total of 1.8 million active customers. This was an increase of 19% year on year.
Pleasingly, FY 2022 has started positively and the company's revenue was tracking ahead of the prior corresponding period at the end of August. A further update on Booktopia's performance is likely to be released later this month.
In the meantime, the team at Morgans is very positive about Booktopia's outlook. Its analysts have an add rating and $3.72 price target on its shares.
Universal Store Holdings Limited (ASX: UNI)
Another small cap share to look at is this fashion retailer. Universal Store aims to deliver an ever-changing and carefully curated selection of on-trend products for younger consumers.
This strategy has been working very well, leading to strong sales and profit growth in FY 2021. Universal Store reported a 36.1% increase in sales to $210.8 million and an 87.7% jump in underlying net profit after tax to $30.4 million.
This went down well with the team at Macquarie. In response, the broker put an outperform rating and $8.90 price target on its shares.
