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7 small-cap stocks loved by the Rich 200

Although the bulk of an investor’s portfolio should be comprised of strong, well-established companies or those with good growth prospects, adding the occasional small-cap stock can also deliver outstanding rewards.

In fact, that’s exactly what some of the members of the BRW Rich 200 are doing. Here are seven companies that boast a market capitalisation of $300 million or less that are most popular amongst the members of this prestigious group:

  • Allied Healthcare (ASX: AHZ) is one of the stand-out small-cap stocks amongst the Rich 200 members, including Fortescue Metals (ASX: FMG) major shareholder Andrew Forrest. The company has gained an astounding 640% over the last 12 months as it continues to deliver promising test results. Shares are currently trading at 15.5c and it boasts a market capitalisation of roughly $200 million.
  • Adslot (ASX: ADJ) is an online classified marketing business that has gained 194% over the last year and should capitalise on the rapid growth of classified providers, including Carsales and Seek. Its market capitalisation is currently $78 million.
  • Yellow Brick Road (ASX: YBR) is a wealth management company that was founded by Mark Bouris, who also established Wizard Home Loans. The financial industry has been tipped as one of the industries to drive growth for the economy over the next two decades and this company could be one to benefit significantly. Shares are trading for 58c and its market capitalisation is $112 million.
  • Neuren Pharmaceuticals (ASX: NEU) is a biopharmaceutical company focused on developing therapies for brain injuries, cancer and neurodegeneration. Shares have gained 189% in the last 12 months, boosting its market cap to $152 million.
  • My Net Fone (ASX: MNF) is a junior telecommunications company that Gordon Martin, owner of Coogee Chemicals, holds faith in. The company has been active in the acquisition market, which has pleased investors, who have pushed the company’s shares up 200% in the last 12 months
  • Flight Centre (ASX: FLT) co-founder Geoff Harris maintains a small stake in K2 Asset Management (ASX: KAM), an Australian based fund manager. Its market capitalisation is $167 million and its shares have appreciated 93% in 12 months.
  • Since issuing 75 million shares in 2011 at a price of 50c each, Tigers Realm Coal (ASX: TRC) hasn’t exactly been a tale of success. Its shares are currently trading at 18c each, but it has at least regained 42% over the last 12 months.

Note: Australian Pharmaceutical Industries (ASX: API) was included within the list of popular small caps, but recent gains have pushed its market capitalisation above $300 million ($312 million, to be precise).

Foolish takeaway

Investors with a little bit of spare cash could consider following the lead set by the Rich 200, however, they should also be aware that they carry much heavier risk than most other stocks listed on the ASX so should be approached with caution!

 

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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