It has been a shaky start for the ASX this week. Today, the ASX dipped by 0.6% at the time of writing this piece. RBNZ’s rate hike seems to have triggered a shift in momentum which has resulted in the banks and travel stocks taking the hit.
A2 Milk shares were the worst performing today as the stocks dipped over 7%, while CBA dropped by 2%. Travel stocks Webjet and Flight Centre have each dropped by over 6%.
Small Caps, while risky, come with lots of potential. They are essential for above average growth in a portfolio. Lucky for us, the ASX is home to several top small cap stocks.
Baby Bunting is Australia’s largest specialty nursery retailer and one-stop-baby shop. BBN provides an unrivalled selection in all the best brands across prams, car seats, cots, nursery furniture, highchairs, bathing, feeding, home safety, toys, and babywear. Currently, BBN has an impressive addressable market estimated at $2.5 billion. The group has a solid network of 100+ stores nationwide. In FY22, BBN is expected to launch into New Zealand. The NZ business will have a potential $429 million market opportunity.
BBN reported stellar performances across the board in FY21. Profit growth, improved operating margins, and overall great execution of its transformation initiative were the highlights. BBN also has a plan to expand its footprint to New Zealand despite the impact of COVID-19.
We see in BBN a resilient business as it operates in a less discretionary category with around 300 thousand births a year in Australia. BBN is expected to keep its growth momentum going in FY22 as they expand thier store network.
BBN shares currently trade at $5.67 a share and with a dividend yield of 2.55%. It is one of the best stocks to buy on the ASX.
Core Lithium is well-positioned to be Australia’s next lithium producer. They are developing one of Australia’s most capital-efficient and lowest-cost spodumene lithium projects – The Finniss Lithium Project.
The Finniss Lithium Project is located 88km from Darwin Port in the Northern Territory. In 2021, Core released a Definitive Feasibility Study and Scoping Study on Finniss. The highlights included production of an average 173,000 tonnes per annum of high-quality lithium concentrate at a C1 OPEX of US$364 per tonne. This is one of Australia’s highest-grade lithium Mineral Resources, along with an initial ten-year mine-life.
Core has already secured a few offtake arrangements with some key battery suppliers. One of them is Yahua, which is one of Tesla’s battery manufacturers. The latest funding to date came from Ganfeng investment of $34 million along with a four-year offtake agreement.
CXO has lots of potential and at $0.39 a share, it is one of the best ASX small cap stocks to consider.