The small end of the Australian share market is home to a number of companies with the potential to grow materially in the future.
Two that analysts at Goldman Sachs believe have huge potential are listed below. Here's why the broker is tipping them to more than double in value over the next 12 months:
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Hipages Group Holdings Ltd (ASX: HPG)
The first ASX small cap share that Goldman is bullish on is Hipages.
It is a leading Australia-based online platform and software as a service (SaaS) provider that connects consumers with trusted tradies.
Goldman Sachs believes Hipages has a compelling long term growth opportunity as it scales to become the leading trade services marketplace in Australia. It has previously likened the company to Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA) in their early days.
It said: "In our view, the opportunity for HPG is similar to REA/CAR, which are now the leading online platforms in their respective industries."
Goldman has a buy rating and $3.60 price target on its shares. Based on the current Hipages share price of $1.34, this implies potential upside of 168% for investors.
Nitro Software Ltd (ASX: NTO)
Another small cap tipped to shine is Nitro Software. It is a software company that is aiming to drive digital transformation in organisations around the world with its increasingly popular Nitro Productivity Suite.
This suite provides businesses with integrated PDF productivity and electronic signature tools. A testament to the quality of its software is that a number of the largest companies in the world use it. This includes over half of the Fortune 500.
Goldman Sachs believes Nitro has enormous growth potential as a challenger in a US$34 billion total addressable market (TAM) across PDF, e-signing and workflows.
It said: "Nitro operates in large, underpenetrated markets supported by structural growth tailwinds including remote work, enterprise digitisation and e-signing adoption. We estimate Nitro can increase its TAM penetration from 0.15% to 1.4% by FY40 implying 9x uplift to Nitro's current revenue base."
Goldman has a buy rating and $2.60 price target on its shares. Based on the latest Nitro share price of $1.23, this suggests potential upside of 111%.
