So far it has been another great year for Australian small-cap shares. Year to date the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) (ASX: XSO) is up 8%.
This is the same gain that the small-cap index provided investors last year and once again outperforms the illustrious S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
With a collection of high-quality growth shares within the small cap index, I feel reasonably confident that we will see more of the same in 2017. In light of this, four small-cap shares at the top of my buy list are as follows:
Bionomics Ltd (ASX: BNO)
This fast-growing biopharmaceutical company has a number of lucrative drugs in its pipeline. One in particular which I believe has huge potential is its BNC210 drug for the treatment of anxiety. Phase II trials revealed that the drug outperformed the current standard of care with no signs of sedation, memory impairment, addiction or loss of motor co-ordination. These side effects can occur with the use of benzodiazepines such as Lorazepam. According to management the anxiety disorders market is projected to reach US$18.2 billion by 2020.
Class Ltd (ASX: CL1)
Although its shares are up 76% this year, they have now fallen around 25% from their September high. I put this decline down to profit taking and believe it has created a great buying opportunity for investors with a long-term view. In the most recent quarter Class added 11,880 billable SMSFs to it Class Super platform. This brought the total to 122,494, which is the equivalent of a 20.9% market share.
Capilano Honey Ltd (ASX: CZZ)
This leading honey producer had a strong FY 2016 resulting in a 20.9% jump in net profit after tax to $9.5 million. As well as benefiting from the health and wellness boom, a good portion of Capilano Honey's growth came from the China market. Sales in the country grew 56.9% year on year. I expect this strong performance to continue for a number of years to come, making it a great buy and hold investment. Especially at just 16x full year earnings.
MNF Group Ltd (ASX: MNF)
MNF Group is a founder-led provider of voice-based internet communications with ambitions to become a leading global provider of wholesale voice minutes. In FY 2016 MNF Group reported record full year EBITDA of $17.8 million. Up an impressive 46% on last year. The good news is that as well as looking for earnings accretive acquisitions, management is confident of another year of solid organic growth in the year ahead.
