Some of the biggest blue chips on the ASX today, like REA Group Ltd (ASX: REA) and CSL Ltd (ASX: CSL), once started as much smaller players.
For patient investors, spotting the next generation of rising stars early can be incredibly rewarding.
Two small cap ASX shares that could grow into much larger businesses over the coming years are named below. Here's what you need to know about them:
Image source: Getty Images
Siteminder Ltd (ASX: SDR)
The first small cap ASX share with significant potential is Siteminder. It is a global hotel commerce platform, helping accommodation providers connect with online booking channels, manage reservations, and maximise revenue.
At the last count, its partner ecosystem was generating more than 130 million reservations worth over A$85 billion in revenue for its hotel customers each year.
With travel markets rebounding and hotels investing more in digital solutions, Siteminder has significant room to expand. Its subscription-based model delivers recurring revenue and strong customer retention. If management executes well, Siteminder could scale to become one of the ASX's leading tech shares in the years ahead.
Macquarie is a fan of the company and believes it is well-placed for growth in the coming years. It recently put an outperform rating and $8.11 price target on its shares.
Temple & Webster Group Ltd (ASX: TPW)
Another small cap ASX share that could be destined for big things is Temple & Webster. It has built Australia's largest online furniture and homewares store. The company has tapped into the structural shift towards e-commerce, offering a vast range of products through an asset-light, online-only model.
Despite strong growth to date, the penetration of online sales in the furniture and homewares category remains relatively low in Australia compared to markets like the U.S. and Europe. That leaves a long runway for growth over the next decade and beyond. With a strong brand, growing market share, and a scalable platform, Temple & Webster could become a household name and potentially a future blue chip.
Macquarie is also very bullish on this name and sees plenty of value in its shares at current levels. The broker recently put an outperform rating and $31.30 price target on them.
Foolish takeaway
No small-cap investment is without risk. Siteminder and Temple & Webster will both face competition and need to keep executing to deliver on their potential.
But with strong business models, exposure to powerful long-term trends, and plenty of growth still ahead of them, these two shares could reward investors who are willing to take a long-term view.
