If you're wanting to gain exposure to the small side of the market, the shares listed below could be worth considering.
Both of these small cap ASX shares have been tipped as buys by analysts. Here's why:
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Adore Beauty Group Limited (ASX: ABY)
The first small cap ASX share to look at is Adore Beauty. It is an integrated content, marketing, and ecommerce retail platform with a focus on the beauty market.
At the last count, the company had 874,000 active customers, which was up 24% over the prior corresponding period. From these customers, the company generated revenue of $63.8 million during the first quarter of FY 2022. This represents a 25% increase on the same period last year.
The good news is that even if you annualise its Q1 revenue to $255 million, it is still only a small slice of the $11 billion a year Australian beauty and personal market. This provides Adore Beauty with a long runway for growth over the next decade as more and more industry sales shift online.
Shaw and Partners is a fan of Adore Beauty. Its analysts currently have a buy rating and $6.00 price target on its shares.
Serko Ltd (ASX: SKO)
Another small cap ASX share to look at is Serko. It is an online travel booking and expense management provider.
It recently announced the completion of a NZ$75 million placement to support its growth. This includes supporting Serko's global marketplace strategy, which is aiming to transform the company from an online booking tool into a distributed marketplace.
In addition, some of the proceeds will be used to support its Booking.com for Business offering. Management advised that following the successful migration of Booking.com business customers onto the new Zeno powered Booking.com for Business platform, Serko will undertake targeted investment to optimise customer engagement and extend the offering across global markets to maximise the potential of the opportunity.
All in all, this appears to have left Serko well-placed for growth once travel markets return to normal.
Ord Minnett certainly believes this to be the case. Last week the broker retained its buy rating and lifted its price target to $8.10.
