At the small end of the market, there are a number of shares that have the potential to grow strongly in the future.
Two that could be worth watching very closely are listed below. Here's what you need to know about these small cap ASX shares:
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Booktopia Group Ltd (ASX: BKG)
The first small cap ASX share to watch is rapidly growing online book retailer, Booktopia.
It was a very strong performer in FY 2021, reporting a 35% lift in revenue to $223.9 million and a 125% jump in underlying EBITDA to $13.6 million.
This was underpinned by a 19% increase in active customers to 1.8 million and a 26% lift in units shipped to 8.2 million. The latter was supported by its new automated distribution centre, which allowed the company to capture increased demand from the shift to online shopping.
And while no guidance was given for FY 2022, management revealed that the new financial year has started strongly and revenue was tracking ahead of the prior corresponding period at the end of August.
Morgans is very positive on the company's outlook. It currently has an add rating and $3.72 price target on Booktopia's shares.
Damstra Holdings Ltd (ASX: DTC)
Another small cap ASX share to watch is Damstra. It is an integrated workplace management solutions company providing an increasingly popular cloud-based workplace management platform.
This platform is used by businesses globally to track, manage, and protect their workers and assets.
It was also on form in FY 2021. For the 12 months ended 30 June 2021, Damstra reported a 63% increase in annual recurring revenue (ARR) to $34.5 million. This was driven by a 74% increase in user numbers to 737,000.
The company has also just strengthened its offering with the acquisition of TIKS Solutions for $15.5 million. This leaves Damstra well-placed to continue growing into its substantial addressable market. Management estimates that its total addressable market (TAM) will be worth US$20 billion in 2022.
The team at Shaw & Partners are positive on the company. They have a buy rating and $1.67 price target on its shares.
