It certainly has been a great 12 months for Australia’s small cap shares. During this time the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) (ASX: XSO) has risen a stunning 16.4%.

Despite the strong gains from the index, I still feel there are a number of small caps out there with the potential to keep on climbing higher. Here are four of them:

Capilano Honey Ltd (ASX: CZZ)

This leading honey producer is looking to China for growth and so far so good. A big driver in its recent 20.9% jump in full year net profit after tax to $9.5 million was its China business. Sales to greater China grew a whopping 56.9% year on year. At 17x full year earnings its shares look to be good value in my opinion.

Impedimed Limited (ASX: IPD)

This medical device company has two key products which I believe have strong potential. Firstly its SOZO device scans the body and is able to judge the user’s overall health status. I see this appealing to doctors, gyms, and health fanatics. Then there’s its L-Dex lymphoedema detection product which has launched in the US and is pursuing the Chronic Heart Failure business.

Money3 Corporation Limited (ASX: MNY)

The shares of this small loans company have gone gangbusters this year and more than doubled in value. Despite this they are still changing hands at under 14x full year earnings. Thanks to the strong performance of its auto loans business, I feel confident the company will continue growing earnings at a rapid clip. Another bonus is that its shares are expected to provide a fully franked 3.3% dividend in FY 2017 according to CommSec.

Xenith IP Group Ltd (ASX: XIP)

Xenith IP is a provider of a range of intellectual property services for thousands of clients across the globe. At 13x full year earnings it strikes me as great value. Especially when you factor in that next year the company is forecast to raise its dividend to 16.8 cents per share. At the current share price this would be a generous fully franked 5% dividend.

Need to make room in your portfolio? Getting rid of these wealth-destroying shares would be a great start. Are they in yours?

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.