ound this Article from internet todayTristan Harrison | April...

ound this Article from internet today

Tristan Harrison | April 23, 2020 10:20am |More on: BUBPPH

I think ASX small cap shares could be good to buy at a time like this.

The coronavirus has been very damaging for small caps. It’s this end of the market that get hits the most when the share market declines as investors search for the safety of blue chips.

I think ASX small cap shares could be good to buy at a time like this.

The coronavirus has been very damaging for small caps. It’s this end of the market that get hits the most when the share market declines as investors search for the safety of blue chips.

I think investors need to consider the industry and business itself over the size of the company. It’s obvious that businesses like travel businesses and banks are going to report huge earnings hits over the next 12 months. But some small caps could actually be very good value.

Keep in mind that with lower interest rates, most businesses should be a valued a bit higher than they would have been otherwise.

Here are two ASX small cap shares that I think could be worth buying right now:

Bubs Australia Ltd (ASX: BUB)

Bubs is a relatively small infant formula business with big growth potential. It specialises in providing goat milk products, which is gaining a lot of traction. But it’s also to grow an infant formula range based on organic grass-fed cow ingredients.

The company is growing very fast, particularly with Chinese customers. The company recently announced that in the March 2020 quarter total revenue increased 67% compared to the prior corresponding quarter and it was up 36% on the previous quarter. Total infant formula revenue grew 137% compared to last year. Direct total Chinese revenue more than doubled.

Bubs’ performance was so strong that, combined with a focus on lowering costs, it generated a positive quarterly operating cashflow of $2.3 million.

With a secured supply chain, I think Bubs is looking good for strong profit growth in the coming years, which will hopefully lead to very attractive shareholder returns over time.