Analysts say these small cap ASX shares have huge potential

These small caps are rated very highly…

| More on:
A young man wearing a black and white striped t-shirt looks surprised.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The small side of the market has been well and truly out of form in 2022. While this is disappointing, it may have created a buying opportunity for patient, long term focused investors.

For example, the two small cap ASX shares listed below have fallen materially but still have incredibly bright futures. Here's why analysts are rating them as buys:

Hipages Group Holdings Ltd (ASX: HPG)

The first ASX small cap share to look at is Hipages. It is a leading online platform provider that provides job leads to tradies from homeowners and organisations looking for qualified professionals.

Goldman Sachs remains very positive on Hipages. This is due to its belief that it can capture a significant portion of industry advertising spend in the future. The broker has likened Hipages to the early days of Ltd (ASX: CAR) and REA Group Limited (ASX: REA). And looking at where these two companies are today, this is quite a statement.

The broker commented:

In our view, the opportunity for HPG is similar to REA/CAR, which are now the leading online platforms in their respective industries. […] HPG presents a compelling long term growth opportunity as it scales to become the leading trade services marketplace in Australia.

Goldman Sachs has a buy rating and $2.50 price target on its shares.

Nitro Software Ltd (ASX: NTO)

Another small cap that is highly rated is Nitro Software. It is the document productivity software company behind the Nitro Productivity Suite that is driving digital transformation in organisations around the world.

Bell Potter is very positive on Nitro and notes that it continues to win market share due to its cost effective and easy deploy offerings. The broker also sees significant cross sell opportunities ahead.

It said:

The company has been successfully competing against and gaining market share from more entrenched providers in the market by providing a more cost effective and easier to deploy solution for both PDF productivity and electronic signing. […] The company now has a new area of growth, however, with the release of Nitro Sign as a standalone product so most customers will likely have to start paying more for using this product.

Bell Potter has a buy rating and $2.50 price target on its shares.

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 positions in and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia has positions in and has recommended Hipages Group Holdings Ltd. 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 Scott Phillips.

More on Small Cap Shares

Kid stacking coins from the jar.
Resources Shares

1 ASX penny stock I'd buy in April while it is still only 21 cents

Up 135% since February, I think this ASX penny stock has a lot more gains ahead.

Read more »

A happy woman wearing a sweatband at the gym celebrates success or an achievement by puffing up and flexing her muscles with pride.
Small Cap Shares

The tiny ASX stock that could surge on this pending government decision

Will a tax break help this little company set a new PB?

Read more »

three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.
Small Cap Shares

My 3 top small-cap ASX shares to buy in April

After a dark period, the little guys are ready to take the fight to the large caps. Here are three…

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Small Cap Shares

Why this ASX small cap stock could rocket 60%

Bell Potter sees huge upside potential from this small cap.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Kid putting a coin in a piggy bank.
Small Cap Shares

7 ASX small-cap shares that are cheaper than the ASX 200 in March 2024

Could it be time to back the underdogs of the ASX amid a potentially richly-valued benchmark?

Read more »

Three young people in business attire sit around a desk and discuss.
Small Cap Shares

3 ASX penny stocks I don't think will be below 80 cents much longer

These sub-dollar shares are all capable of smashing through to another level, say experts.

Read more »

Kid on a skateboard with cardboard wings soars along the road.
Small Cap Shares

Want to make big returns? ASX small-cap shares are poised to outperform

Smaller businesses could be compelling investments today, according to an expert.

Read more »