Wanting some ASX small caps in your portfolio? If you are, check out the two listed below that brokers rate as buys.
Here’s what the broker is saying about these small caps:
Acrow Formwork and Construction Services Ltd (ASX: ACF)
The first ASX small cap share that could be a buy is Acrow Formwork and Construction Services.
Acrow is a growing provider of engineered formwork, scaffolding, and screen systems solutions to the construction sector.
Morgans likes the company enough to have it on its best ideas list. This is due to its belief that it is well-placed to benefit from growing civil infrastructure activity across the east coast. It also notes its attractive valuation. It said:
ACF is a well-managed business with leverage to growing civil infrastructure activity over the long term, especially on the east coast. Momentum remains strong with two earnings upgrades so far in FY23. We believe the valuation remains attractive (~7x FY24F PE and ~5% yield) with potential positive catalysts from further meaningful contract wins.
The broker has an add rating and 95 cents price target on its shares.
Maas Group Holdings Ltd (ASX: MGH)
Another small cap ASX share to consider buying is Maas. It is a growing construction material, equipment and service provider.
Goldman Sachs is a fan of Maas and believes it could be a top option right now. This is thanks to its ongoing transition, which it believes will support higher quality earnings. 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.
