Brokers say these small cap ASX shares are buys with huge upside potential

These small cap shares could add some oomph to your portfolio.

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If you have a higher than average risk appetite, then investing at the small end of town could be worth considering. Especially given the potentially strong returns that are on offer with small cap ASX shares.

But which small caps could be buys? Two that brokers rate as buys are listed below. Here's what they are saying about them:

Maas Group Holdings Ltd (ASX: MGH)

The first small cap ASX share to look at is construction material, equipment and service provider, Maas.

Goldman Sachs is a fan of the company and believes it could be a small cap share to buy. This is due to its ongoing transition, which the broker believes will underpin higher quality earnings in the future. It explained:

We believe MGH is in a transition phase and will see higher quality real estate income become the largest source of earnings in the next 3-5 years. We believe the market is mispricing how MGH's civil and construction capabilities support the property development business to deliver best-in-class margins and asset turnover. In our view the value created through the development of quality annuity revenue from Build-to-Rent (BTR), Land Lease (potentially generating a 4.5x ROIC annuity income stream) and commercial real estate projects could re-rate the stock.

Goldman has a buy rating and $4.00 price target on its shares. This compares to the latest Maas share price of $2.70.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX share that has been tipped as a buy is Volpara. It provides software that uses artificial intelligence imaging algorithms to assist with the early detection of breast and lung cancer.

Morgans is very positive on the company's outlook, particularly given recent regulatory changes in the massive US market. It said:

After a long wait, the FDA finalised federal legislation for mammography centers to report breast density to patients. This is positive for VHT's FDA cleared AI volumetric density software. VHT also announced a further contract win with Sutter Health for their Risk Pathways product, with an additional TCV of US$900k over 3 years. This expands their existing relationship with Sutter. […] We view both of these announcements as incrementally positive for the company. We see VHT at a critical turning point in the company's trajectory to profitability with improving investor sentiment.

Morgans has an add rating and $1.21 price target on its shares. This compares favourably to the latest Volpara share price of 77 cents.

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. has positions in and has recommended Volpara Health Technologies. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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