The small side of the market has been well and truly out of form in 2022. While this is disappointing, it may have created a buying opportunity for patient, long term focused investors.
For example, the two small cap ASX shares listed below have fallen materially but still have incredibly bright futures. Here's why analysts are rating them as buys:
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Hipages Group Holdings Ltd (ASX: HPG)
The first ASX small cap share to look at is Hipages. It is a leading online platform provider that provides job leads to tradies from homeowners and organisations looking for qualified professionals.
Goldman Sachs remains very positive on Hipages. This is due to its belief that it can capture a significant portion of industry advertising spend in the future. The broker has likened Hipages to the early days of Carsales.com Ltd (ASX: CAR) and REA Group Limited (ASX: REA). And looking at where these two companies are today, this is quite a statement.
The broker commented:
In our view, the opportunity for HPG is similar to REA/CAR, which are now the leading online platforms in their respective industries. […] HPG presents a compelling long term growth opportunity as it scales to become the leading trade services marketplace in Australia.
Goldman Sachs has a buy rating and $2.50 price target on its shares.
Nitro Software Ltd (ASX: NTO)
Another small cap that is highly rated is Nitro Software. It is the document productivity software company behind the Nitro Productivity Suite that is driving digital transformation in organisations around the world.
Bell Potter is very positive on Nitro and notes that it continues to win market share due to its cost effective and easy deploy offerings. The broker also sees significant cross sell opportunities ahead.
It said:
The company has been successfully competing against and gaining market share from more entrenched providers in the market by providing a more cost effective and easier to deploy solution for both PDF productivity and electronic signing. […] The company now has a new area of growth, however, with the release of Nitro Sign as a standalone product so most customers will likely have to start paying more for using this product.
Bell Potter has a buy rating and $2.50 price target on its shares.
