2 highly rated small cap ASX shares to watch

Keep an eye on these small cap ASX shares…

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The small end of the Australian share market is home to a number of companies with the potential to grow strongly in the future.

Two small caps that investors may want to get better acquainted with are listed below. Here's what you need to know about them:

Mach7 Technologies Ltd (ASX: M7T)

The first small cap ASX share to watch is Mach7. It is a medical imaging data management solutions provider that allows users to create a clear and complete view of the patient. This is used to help inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes.

Demand for Mach7's offering has been growing strongly in recent years and is expected to continue doing so in the years to come. This is thanks to the quality of this software and trends such as telehealth. In respect to the latter, the company notes that COVID-19 has popularised telehealth services, which are creating a need for this type of technology.

And while it has been growing strongly, it is still only scratching at the surface of its overall market opportunity. According to management, the company's total addressable market is estimated to be US$2.75 billion. This gives Mach7 a long runway for growth over the next decade.

Morgans currently has an add rating and $1.68 price target on its shares. This compares to the latest Mach7 share price of $1.03.

Whispir Ltd (ASX: WSP)

Another small cap share to watch is Whispir. It provides businesses with a cloud-based communications platform that brings all communications channels like email, text messaging and web chatting together in one easily accessible space. This helps businesses large and small eradicate communication inefficiencies so their staff and customers can connect in new and productive ways.

As with Mach7, demand has been increasing strongly for its offering. This has led to rapid recurring revenue growth in recent years. The good news is that Whispir's current revenues are only a small fraction of its addressable market.

For example, at the end of the third quarter, Whispir's annualised recurring revenue was up 20.3% to $50.3 million. This compares to its total addressable market of US$4.7 billion in the just United States market.

Ord Minnett currently has a buy rating and $4.25 price target on the company's shares. This compares favourably to the latest Whispir share price of $2.73.

Motley Fool contributor 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 has recommended MACH7 FPO and Whispir Ltd. The Motley Fool Australia has recommended MACH7 FPO and Whispir Ltd. 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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