2 exciting small cap shares named as buys

These small cap shares have a lot of potential…

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If you’re a fan of small caps, then you’re in luck. Because there are a number of exciting ones on the Australian share market that have been tipped as buys.

Here are two small cap ASX shares that analysts rate highly:

Airtasker Ltd (ASX: ART)

The first small cap ASX share to consider is this growing online marketplace for local services.

Analysts at Morgans are very positive on Airtasker. This is due to their belief that the company has a very attractive business model and a significant market opportunity.

Morgans highlights that the company’s product works for both sides of the marketplace, has attractive unit dynamics with healthy gross and contribution margins, an enormous total addressable market (TAM) in the early stages of ecommerce adoption, and a large international expansion opportunity. The latter provides the company with a long growth runway in the future.

The broker has an add rating and $1.27 price target on the company’s shares.

Nitro Software Ltd (ASX: NTO)

Another small cap that is rated highly is Nitro. It is a fast-growing global document productivity software company aiming to accelerate digital transformation in a world that demands the ability to work from anywhere, anytime, on any device.

It is doing this with its Nitro Productivity Platform, which offers comprehensive business solutions including powerful PDF productivity, eSigning, and industry-leading analytics. At the last count, Nitro had over 2.8 million licensed users and 12,000+ business customers in 155 countries. This includes over 68% of the Fortune 500 and three of the Fortune 10.

This has underpinned strong annualised recurring revenue (ARR) growth in recent years and has continued in FY 2021. For example, during the third quarter, Nitro reported a 50% increase in its ARR. This puts it on course to achieve its ARR guidance of US$39 million to US$42 million in FY 2021. This is still only a fraction of its estimated total addressable market of $28 billion.

Bell Potter is very positive on Nitro. It currently has a buy rating and $4.50 price target on its shares.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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*Returns as of January 12th 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. has recommended Airtasker Limited. The Motley Fool Australia has recommended Nitro Software Limited. 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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