When looking for long-term buy and hold investments I believe some of the best options out there are not in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), but can be found outside the benchmark index in the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) (ASX: XSO).
Three small-cap shares which I believe have bright long-term growth prospects are listed below. Here's why I'm tipping them for big things:
Bionomics Ltd (ASX: BNO)
Thanks largely to its BNC210 drug and its partnership with U.S. giant Merck & Co, I think Bionomics is a small-cap with explosive growth prospects. BNC210 is a drug that has been designed to treat Generalized Anxiety Disorder (GAD). With 40 million Americans diagnosed with GAD, and 6.8 million of them with chronic GAD, the size of the market is projected to be worth US$18.2 billion by 2020. Recent trials of BNC210 have been very encouraging. It has outperformed the current standard of care Lorazepam and importantly not produced any signs of sedation, memory impairment, addiction, or loss of motor co-ordination.
Murray River Organics Ltd (ASX: MRG)
Although at present this organic health snacks company derives the majority of its sales from the Australian and New Zealand market, in the future that could all change. The recently listed company has engaged sales representatives in Europe, North America, China, and Japan with the aim of boosting its exports. With the global certified organic food and drink market estimated to be worth $104 billion a year, this is clearly a smart move by management. So with its shares changing hands at around 17x forecast FY 2017's earnings as per its prospectus, I think the company is a great option for investors.
Nearmap Ltd (ASX: NEA)
I've been pleased with the rate in which this aerial imaging company has grown its U.S. business since implementing a paywall for its services. Although the company angered shareholders when it raised capital last year, I'm optimistic that these funds will be used effectively to accelerate its growth. So with the company debt-free, cash-rich, and confident that there is a sizeable market opportunity in the United States, I think Nearmap could be a great buy and hold investment. Especially after recent weakness in its share price. Investors can snap up shares today at a 37% discount to their 52-week high.
