If you want to supercharge your investment returns, investors need to bypass the usual blue-chip mega-market capital companies that make up a big percentage of the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) and take a closer look at smaller market cap companies.
It’s very difficult for companies like Telstra Corporation Ltd (ASX: TLS) or Wesfarmers Ltd (ASX: WES) to double their revenues and earnings in a short period of time, if at all, from where they are currently.
That’s not the case with small caps, which can double, triple or quadruple earnings or more, taking their share prices along with them.
Here are three small cap stocks that have the potential to become the billion-dollar stars of the ASX in the future…
Nearmap Ltd (ASX: NEA)
The photomapping company has a market cap of just $176 million today, but expansion into the US (and potentially other countries), as well as domestic organic growth could see this company grow earnings at a rapid rate. Nearmap recently reported its maiden profit, with revenues growing 62% over the previous year.
Unilife Corporation (ASX: UNS)
Unlife develops injectable drug systems and expects to release a number of new products this year. With revenues growing at an astonishing 436% to US$14.7 million in the 2014 financial year, it may not be long before this company is reporting healthy profits. With a market cap of just $286 million, Unilife could be one of the ASX’s blue chip stocks before long.
Energy Action Ltd (ASX: EAX)
Energy Action has a market cap of just $80 million today. The company runs the Australian Energy Exchange which allows clients to procure gas and electricity at the lowest possible prices. Energy Action is also an energy broker, securing best energy deals for government businesses and corporations. Energy Action disappointed shareholders with its most recent results, but that could just be a one off. With the share price down 25% since November 2013, this could be an opportunity.
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
Motley Fool writer/analyst Mike King owns shares in Telstra Corporation and Nearmap. You can follow Mike on Twitter @TMFKinga