Large-cap shares such as Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES) are household names which no doubt feature in many readers' portfolios. These types of shares are often low-risk investments which provide investors with steady returns.
At the other side of the market you have small-cap shares. Due to their size they can be high-risk investments, but can provide investors with the potential for strong returns.
After all, it is much easier for a company with a market capitalisation of $250 million to double in size than it is for a company with one of $25 billion.
Not all small cap shares are destined to grow beyond their small cap status, but there are a few that might. I have picked out four which I believe could have a bright future ahead and would be well worth adding to your watch list today.
Catapult Group International Ltd (ASX: CAT)
Catapult Group is an exciting sports analytics company operating in a market which is expected to grow to be worth $4.7 billion by 2021. I believe that as one of the market leaders with a client list that includes the biggest sports clubs in the world, Catapult is in a great position to grow at a strong rate for at least the next few years.
Gage Roads Brewing Co Limited (ASX: GRB)
Gage Roads Brewing Co is looking to profit from the insatiable appetite for craft beer across the world. With a market cap of just over $26 million it certainly would be a high-risk investment. But with Woolworths Limited (ASX: WOW) as one of its major customers and its largest shareholder with a 24% stake, I feel it is in a great position to grow over the next few years.
Melbourne IT Limited (ASX: MLB)
Melbourne IT provides internet related services such as critical web hosting, online brand protection and enterprise services for a wide range of customers. It is a competitive industry, but I believe its affiliation with TPG Telecom Ltd (ASX: TPM) and its collection of brands should prove very beneficial for growth in the future. According to CommSec, analysts expect earnings to grow by over 69% per annum through to FY 2018.
Sealink Travel Group Ltd (ASX: SLK)
SeaLink has ferry services across Australia in key tourist hotspots such as Sydney Harbour. As tourism ramps up thanks to a weaker Australian dollar and growing Chinese tourism, I expect SeaLink to prosper. Analysts estimate that its earnings will grow by 41% per annum for the next couple of years. If this proves to be the case then I believe the share price could climb much higher during this time. For this reason I think SeaLink, much like this incredibly exciting share, is well worth adding to your watch list today.
