If you’re looking for a little extra bang for your buck in 2015, there are many small-cap ASX stocks which are currently offering compelling long-term value.
That’s because some fund managers and index funds are prohibited from investing in companies outside the S&P/ASX 300 (INDEX: ^AXKO) (ASX: XKO).
And as a result analysts aren’t paid to cover the stocks. Thus affording ordinary investors ample opportunity to get in before the professionals, sometimes at significantly cheaper prices.
So long as you’ve got a well-diversified portfolio with shares such as Woolworths Limited (ASX: WOW) forming the foundation and have a stomach for volatility, then I think it’s ok for investors to try their hand at a few smaller companies.
Right now, I’ve got four ultra-promising small-cap stocks on my 2015 watchlist. Two I already own (see my disclosure below) but would gladly buy again…
1. Netcomm Wireless Ltd (ASX: NTC) is a $58 million machine-to-machine (M2M) communications and broadband developer. After posting a 280% jump in profit in FY14, Netcomm’s share price has almost halved. That’s despite a bullish outlook for the year ahead and excellent long-term industry prospects.
2. Yellow Brick Road Holdings Ltd (ASX: YBR) is a junior diversified financial company with a rapidly growing branch network. Although it is not yet profitable, on November 25 the company released a business update detailing its integration of two recent acquisitions. Together with maturing branches, this bodes well for profitability in the near future.
3. Affinity Education Group Ltd (ASX: AFJ) is a childcare centre owner and operator. Shares in the $190 million company trade relatively cheap despite it recently reporting improved occupancy rates, a large acquisition and healthy increase in average fees.
4. Gage Roads Brewing Co Limited (ASX: GRB) is a brewing company located in Western Australia. Gage experienced a production mishap earlier in the year but things are now looking up. The $59 million company is 25% owned by Woolworths, which partners with it for exclusive brand sales.
Our #1 stock idea for 2015 – Yours FREE!
At today’s prices I think each of these four companies have the potential to deliver great returns for investors. Whilst I currently own Yellow Brick Road and Netcomm Wireless, the others are firmly on my buy list moving into 2015.
These 3 stocks could be the next big movers in 2020
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Motley Fool Contributor Owen Raszkiewicz owns shares of Yellow Brick Road and Netcomm Wireless. You can follow Owen on Twitter @ASXinvest.
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