If you're wanting to gain exposure to the small side of the market, the shares listed below could be worth considering.
Both of these small cap ASX shares have been tipped as buys by analysts. Here's why:
Maas Group Holdings Ltd (ASX: MGH)
Goldman Sachs believes that Mass Group could be a small cap ASX share to buy.
Maas Group is a leading provider of property, construction, and infrastructure solutions, predominantly in regional Australia.
Goldman Sachs is positive on the company largely due to its belief that the company's ongoing transition will underpin higher quality earnings in the future. It explains:
We believe MGH is in a transition phase and will see higher quality real estate income become the largest source of earnings in the next 3-5 years. We believe the market is mispricing how MGH's civil and construction capabilities support the property development business to deliver best-in-class margins and asset turnover. In our view the value created through the development of quality annuity revenue from Build-to-Rent (BTR), Land Lease (potentially generating a 4.5x ROIC annuity income stream) and commercial real estate projects could re-rate the stock.
Goldman has a buy rating and $4.00 price target on its shares. This implies 20% upside from current levels.
PeopleIn Ltd (ASX: PPE)
Over at Morgans, its analysts believe the PeopleIn would be a great small cap ASX share to buy right now.
PeopleIn is a talent solutions company in Australia and New Zealand, servicing over 4,200 businesses across three verticals – Healthcare and Community, Professional Services, and Industrial and Specialist Services. Through its nationwide footprint and 26 brands, it employs over 33,500 workers every year.
Morgans believes its shares are very cheap at current levels, particularly given its defensive earnings and positive growth outlook. It commented:
PPE is trading back at $3.00/sh and a sub-10x PER. We continue to think it looks cheap for a company that has grown earnings at c.20% year in year out – company guidance has EBITDA growing 35% in FY23. We are buoyed by management's focus on making the business more defensive, and capable of navigating any potential downturn. The opportunity under the Pacific Australia Labour Mobility (PALM) scheme is massive and following the Federal Government's Job Summit, there has rarely been more focus on increasing migration.
Morgans has an add rating and $4.90 price target on its shares, which implies potential upside of almost 70%.
