2 rapidly growing small cap ASX shares to watch

Booktopia Group Ltd (ASX:BKG) and this ASX small cap share could be worth watching closely in 2021…

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At the small end of the share market there are a number of companies growing at a rapid rate. Two that stand out right now are listed below. 

Here's what you need to know about them:

Booktopia Group Ltd (ASX: BKG)

The first small cap to watch is Booktopia. It is an online book retailer which has really caught the eye since its IPO late last year.

There was a time when many thought that Amazon's launch in Australia would kill off Booktopia, but it certainly hasn't been the case.

During the first half of FY 2021, the company shipped a total of 4.2 million units for the six months. This was up 40% on the prior corresponding period.

This led to Booktopia reporting a 51.1% increase in revenue to $112.6 million and a 502.3% jump in underlying EBITDA to $8 million.

Analysts at Morgans appear confident there will be more of the same in the future.

In light of this, it has placed an add rating and $3.53 price target on its shares.

Universal Store Holdings Limited (ASX: UNI)

Another small cap ASX share to watch is Universal Store.

It is a fashion retailer delivering a frequently changing and carefully curated selection of on-trend items to a target 16-35 year old fashion focused customer.

Its offering is clearly resonating well with consumers. In February the company released its half year results and revealed a 23.3% increase in sales to $118 million.

And thanks to margin expansion, it posted a 63.6% increase in underlying net profit after tax to $21.1 million.

Positively, Universal Store started the second half strongly and looks well-placed to deliver a bumper full year profit result.

Morgans is also a fan of Universal Store. It currently has an add rating and $8.37 price target on its shares.

The broker believes the company can grow its earnings by a compound annual growth rate of 34% over the coming years.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Booktopia Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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