According to the Australian Financial Review, BT Investment Management Ltd (ASX: BTT) believes investors seeking growth should look towards microcap stocks listed on the ASX.
Typically, when the economy slows, many enterprising investors look to small-cap stocks for growth because some may be less prone to the direction of the broader economy.
“There’s no free kicks from the economy and in many cases the large cap companies don’t have the capability or the ingenuity to build new technologies,” Paul Hannan, BT’s head of smaller companies, was quoted as saying during the Australian Microcap Investment Conference this week.
Mr Hannan said BT favours companies with little-to-no debt and solid track records of profit growth.
One of BT’s success stories is retailer RCG Corporation Limited (ASX: RCG). RCG owns The Athlete’s Foot and has exclusive distribution agreements for many leading apparel brands throughout Australia and New Zealand.
Since buying RCG shares in 2008, Mr Hannan said the business had grown well. “In seven years this business has continued to go from strength to strength, it is now a $600 million market cap business.”
Other stocks in the BT portfolio include printed circuit board technology business, Altium Limited (ASX: ALU), and the growing diversified wealth management company run by Mark Bouris, Yellow Brick Road Holdings Ltd (ASX: YBR).
In my opinion, small-cap stocks are a great way to get exposure to industries that are otherwise unattainable from the blue-chip stocks.
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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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