While small cap shares come with more risk than their large cap counterparts, they all offer vastly superior potential returns.
If your risk profile allows for it, then you may want to get better acquainted with the two small cap shares listed below. Here's why they have been rated as buys:
Hipages Group Holdings Ltd (ASX: HPG)
The first small cap ASX share that has been given a buy rating is Hipages.
It is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers. The Hipages platform not only helps tradies grow their businesses by providing job leads, it also allows them to communicate with customers and run general admin duties.
At the last count, over three million Australians had used Hipages, providing more work to over 30,000 trade businesses subscribed to the platform.
The team at Goldman Sachs is very positive on Hipages' future. It notes that the company currently captures ~5% of total industry advertising spend. However, it sees scope for this to increase to 40% to 60% in the future as the company builds out its ecosystem.
Goldman Sachs has a buy rating and $4.90 price target on its shares.
MNF Group Ltd (ASX: MNF)
Another small cap that has been rated as a buy is MNF.
MNF, which will shortly be renamed to Symbio, develops and operates a global communications network and software suite enabling some of the world's leading innovators to deliver new-generation communications solutions. This includes the likes of Google, Twilio, and Zoom.
Demand has been strong for its offering, particularly during the pandemic, thanks to favourable tailwinds such as working from home. In addition to this, the NBN rollout and removal of telephone lines is driving VoiP adoption.
Combined with its international expansion and a strong balance sheet that allows for potential acquisitions, MNF appears well-placed to continue growing at a solid rate over the long term.
Ord Minnett is positive on the company. It currently has a buy rating and $7.90 price target on MNF's shares.
