2 growing small cap ASX shares to watch in 2021

MyDeal.com.au Limited (ASX:MYD) and this ASX small cap share could be worth watching closely in 2021…

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At the small side of the market there are a good number of companies with the potential to grow materially in the future.

Two that have been tipped as future stars are listed below. Here's what you need to know about them:

Mach7 Technologies Ltd (ASX: M7T)

The first small cap share to look at is Mach7. It is a growing developer of enterprise imaging and informatics solutions for image viewing, storage, and workflow management. These solutions can be implemented individually or as a comprehensive end-to-end image management and diagnostic viewing platform.

The company has been experiencing strong demand for its solutions this year despite the pandemic. In fact, one of the largest healthcare Integrated Delivery Networks (IDN) has just become a customer.

Trinity Health has signed a seven-year contract for the license and associated support services for its eUnity enterprise viewer. Trinity Health is the fifth largest healthcare IDN in the United States and will be installing it across multiple facilities within its 92 hospitals.

This caught the eye of analysts at Morgans, who have reiterated their add rating and $1.49 price target on the company's shares. Morgans suspects this contract could be the first of many due to its growing tender pipeline.

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is a $310 million online retail marketplace provider with a focus on furniture, homewares, appliances, technology, baby products, and hardware.

Thanks to the shift to online shopping this year because of the pandemic, MyDeal has been a very strong performer. This has continued in FY 2021, with the retailer recently reporting a 317% increase in first quarter gross sales to $56.67 million. This was driven by the aforementioned shift online and a 268% increase in active customers to 669,897.

One broker that is positive on its prospects is RBC Capital Markets. It recently initiated coverage on MyDeal with a buy rating and $1.60 price target. The broker thinks the company is at an inflection point as annualised gross transaction value exceeds $200 million and customer numbers approach 700,000.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO. The Motley Fool Australia has recommended MACH7 FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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