Broker names 2 small cap ASX shares to buy now

Morgans is bullish on these small cap shares…

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Wanting some ASX small caps in your portfolio? If you are, check out the two listed below that Morgans rates as buys.

Here's what the broker is saying about these small caps:

Acrow Formwork and Construction Services Ltd (ASX: ACF)

The first small cap ASX share that Morgans is tipping as a buy is Acrow Formwork and Construction Services. It is a leading provider of engineered formwork, scaffolding, and screen systems solutions as well as in-house engineering and industrial labour supply services to the construction sector.

Last month, Acrow released its full year results and revealed a 40% increase in revenue to $148.3 million and the doubling of its net profit after tax to $17.8 million.

Morgans was impressed and believes the company is well-placed for further growth. It also highlights that its shares trade on very low multiples despite this positive form. The broker commented:

ACF is a well-managed business with leverage to growing civil infrastructure activity over the long-term, especially on the east coast. We believe the valuation remains attractive (~6x FY23F PE and ~6.5% yield) with potential positive catalysts from further meaningful contract wins.

Morgans has an add rating and 80 cents price target on Acrow's shares.

Mach7 Technologies Ltd (ASX: M7T)

Another small cap ASX share that the broker is a fan of is Mach7. It is a medical imaging systems provider that develops innovative image management and viewing solutions for healthcare organisations.

As with Acrow, it was in fine form in FY 2022. For the 12 months, Mach7 reported a 42% increase in revenue to $27.1 million and a 253% jump in EBITDA to $2.8 million.

The good news is that Morgans expects this solid growth to continue in the coming years. The broker commented:

Mach 7 is a provider of enterprise image management systems that allow hospitals to identify, connect and share image and patient care data. Revenue growth of at least 20% pa is expected over the next three years.

Morgans has an add rating and $1.34 price target on Mach7's 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 MACH7 FPO. The Motley Fool Australia has recommended MACH7 FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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