If you're looking for new investment options at the small side of town, then Goldman Sachs has your back.
Listed below are a couple of small cap ASX shares that it recently put buy ratings on. Here's what you need to know about them:
Adairs Ltd (ASX: ADH)
The first small cap ASX share that Goldman Sachs is tipping as a buy is Adairs.
It is the leading furniture and homewares retailer behind the Adairs, Focus on Furniture, and Mocka brands.
Goldman currently has a buy rating and $3.05 price target on its shares. It likes the company due to its loyal customer base and store expansion opportunity. It commented:
The core Adairs business has a highly loyal customer base, and ongoing store roll-out opportunity: ADH is has a strong brand presence across Australia, a highly engaged and loyal customer base (>1mn Linen Lover members), and ongoing opportunity to roll out new and upsized stores. […] Attractive valuation and high dividend yield: we view valuation as undemanding with ADH trading on 6.9x FY23E P/E
Temple & Webster Group Ltd (ASX: TPW)
Another small cap ASX share that Goldman likes is Temple & Webster.
Despite the company being an online rival to Adairs, the broker remains positive on both.
It currently has a buy rating and $7.55 price target on its shares. Goldman likes Temple & Webster due to its leadership position in a market that is in the process of shifting online. Its analysts explained:
We believe the business has a material runway for long-term growth, supported by a large and growing TAM driven by increasing e-commerce penetration which still lags other comparable markets (Aus 16% vs. UK/US 28%/25%), even after a large pull forward in online sales over the last 2-3 years. […] We believe TPW can deliver long term structural growth, despite a slowdown in the near term macro environment.
