Investing in the small side of the share market carries more risk than other areas. However, if your risk tolerance allows for it, having a bit of exposure to this side of the market could be a good thing for a balanced portfolio given the potential returns on offer.
With that in mind, here are three small cap ASX shares that could be worth watching closely:
Ai-Media Technologies Ltd (ASX: AIM)
The first small cap to watch is Ai-Media Technologies. It is a global media access provider with operations across the ANZ, North American, EMEA and Asia markets. The company's cloud-based technology platform provides live and recorded captioning, transcription, subtitles, translation and speech analytics. Bell Potter is positive on the company. It currently has a buy rating and $1.50 price target Ai-Media Technologies' shares.
Mydeal.Com Au Ltd (ASX: MYD)
Another small cap to watch is MyDeal. It is an online retail marketplace focused on home and lifestyle goods. MyDeal currently has more than 1,800 sellers on its platform with over 6 million products listed across over 2,000 categories. Thanks to this strong offering, its growing active customer base, and the shift online, MyDeal reported a 111% increase in gross sales to $218.1 million and a 119% jump in gross profit to $33.3 million in FY 2021. It has since built on this, reporting a 49% quarter-on-quarter increase in gross sales to $68.5 million during the first quarter. Also continuing to grow were its customer numbers, which had reached ~930,000 at the end of the period. The team at Morgans is positive on the company's long term outlook and has an add rating and 90 cents price target on its shares.
Serko Ltd (ASX: SKO)
A final small cap to watch is Serko. It is an online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. Serko's Zeno Travel platform provides AI-powered end-to-end travel itineraries, cost control, and travel policy compliance to corporate customers. Whereas Zeno Expense allows businesses to automate and streamline their expense administration function, identify out-of-policy expense claims, and prevent fraud. With travel markets rebounding and a major deal with travel giant Booking.com recently commencing, Serko appears well-placed for growth in the coming years. Macquarie currently has an outperform rating and NZ$8.31 (A$8.02) price target on its shares.
