3 high risk, high reward small cap ASX shares named as buys

Here is a group of small cap shares to watch…

| More on:
asx growth shares represented by risk meter with needle pointing to high

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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

Three that investors might want to get better acquainted with are listed below. Here's why they should be on your watchlist:

Adore Beauty Group Limited (ASX: ABY)

The first small cap ASX share to look at is Adore Beauty. This week the company released its half year results and revealed an 18% increase in revenue to $113.1 million. This was driven by a 13% increase in active customers to 876,000 and strong returning customer growth. And while there are concerns about its slender margins, management appears confident they will improve at scale. It also believes the company "is well positioned to capture market share in a large and growing market benefitting from structural tailwinds."

Morgan Stanley remains positive on the company. It currently has an overweight rating and $4.00 price target on its shares.

Booktopia Group Ltd (ASX: BKG)

Another small cap ASX share to watch is Booktopia. This online book retailer has been growing at an explosive rate in recent years. This has been driven by the shift to online shopping and supported by the opening of its new distribution centre. The latter is allowing the company to capture heightened demand and ship more books than ever.

While its shares are out of favour with investors at present, Morgans remains positive. It recently put an add rating and lofty $2.78 price target on its shares. This is more than double the current Booktopia share price.

Whispir Ltd (ASX: WSP)

A final small cap ASX share to watch is Whispir. It is a software-as-a-service company that provides a communications workflow platform that automate interactions between organisations and people. The company notes that its offering enables organisations to improve their communications through automated workflows to ensure stakeholders receive accurate, timely, useful and actionable insights. Among its users are the Australian Government, Changi Airport, Monash University, Nespresso, and Takata. Management estimates that it has a total addressable market of US$4.7 billion in just the United States market.

Canaccord Genuity is bullish on Whispir. It has a buy rating and $3.50 price target on its shares. It feels that the company's shares could rerate once it demonstrates growth in North America.

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 and has recommended Whispir Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited and Booktopia Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Small Cap Shares

Three analysts look at tech options on a wall screen
Technology Shares

Why did this small-cap ASX tech stock just explode 39%?

Investors are piling into the ASX tech stock on Wednesday. But why?

Read more »

Siblings jumping on a trampoline.
Broker Notes

3 ASX small-cap stocks to buy for 2025: brokers

Here are 3 ASX small-cap shares capturing the attention of professional brokers this week.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Small Cap Shares

ASX small-cap stock halted amid global semiconductor deal

Investors are awaiting details of a capital raise.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Small Cap Shares

Why I think this ASX small-cap share is a bargain at $1.20

This retail stock could be a bargain buy right now.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Small Cap Shares

These small cap ASX shares could rise 20% to 50%

These shares could be destined to deliver big returns over the next 12 months according to brokers.

Read more »

three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.
Small Cap Shares

3 ASX small-cap shares to buy now: brokers

The ASX Small Ordinaries Index has lifted 6.5% over the past six months alone.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Small Cap Shares

This ASX small cap stock just rocketed 40%! Here's why

Let's see what is getting investors excited this morning.

Read more »

Kid putting a coin in a piggy bank.
Small Cap Shares

Down 72% form its highs, why this ASX small-cap stock is now 'a bargain'

Everyone likes a bargain.

Read more »