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 that investors might want to put on their watchlists are listed below. Here's why they are rated highly:
Symbio Holdings Ltd (ASX: SYM)
The first small cap to watch is Symbio. It was formerly known as MNF Group and before that MyNetFone. Symbio specialises in the voice over internet protocol (VoIP) technology which is used to support services like teleconferencing, online business meetings, and digital data transfers.
It appears well-placed for growth over the long term thanks to increasing demand for VoIP technology, its expansion into Asia, and its strong balance sheet following divestments. The latter gives management opportunities to look at boosting its growth with acquisitions.
Not that it necessarily needs to. Symbio has been growing its recurring revenue at a solid rate in recent years thanks partly to strong growth in phone numbers on its network. For example, during the first half, the company reported a 13% lift in recurring revenue to $54.4 million. Pleasingly, management sees significant growth opportunity ahead and is boldly targeting 100 million numbers on its network by 2030. This compares to 6.4 million at the end of December.
Ord Minnett currently has a buy rating and $7.15 price target on Symbio's shares.
Whispir Ltd (ASX: WSP)
Another small cap ASX share to watch is Whispir. It provides a leading software-as-a-service (SaaS) communications workflow platform that automates interactions between organisations and people.
Like Symbio, Whispir has been growing at a solid rate in recent years and management appears confident this will continue. This is due to the global mega trend of digital transformation which is providing strong tailwinds.
And given the low levels of churn the company is reporting (under 2%), it appears to have a sticky platform and a strong foundation to build on.
Ord Minnett is also a fan of Whispir. It has a buy rating and $2.85 price target on its shares.
