MENU

4 small-cap stocks to supercharge your portfolio

Photo: Irina Patrascu Gheorgita Flickr

Blue chips stocks like the major banks and mining companies have been disappointing investors because of their lackluster performance. This makes the small cap stocks attractive as they continue to offer growth and decent return in the market.

Small caps stocks are not facing the same headwinds as the large blue chips. In sectors like healthcare, consumer discretionary, information technology and industrials, there are still stocks making impressive returns.

Here are 4 such stocks…

Company Sector ROE Operating             Margin 1 Year Stock Price Performance
Silver Chef Limited (ASX: SIV) Industrials 26.5% 60.7% 62.0%
Nick Scali Limited (ASX: NCK) Consumer discretionary 36.9% 16.6% 52.9%
Reckon Limited (ASX: RKN) Information technology 56.4% 36.8% 33.5%
1300 Smiles Limited (ASX: ONT) Health Care 20.7% 32.9% 30.5%

 

Silver Chef Limited (ASX: SIV) – Silver Chef has a market capitalisation of $287 million. The company operates in the hospitality sector, where it rents out equipment to cafes, restaurants and hotels. Currently, it operates in Australia, New Zealand and Canada. Last year’s dividend yield was 4.1% fully franked.

Nick Scali Limited (ASX: NCK) – Nick Scali has a market capitalisation of $350 million. A retailer of up-market furniture, Nick Scali opened seven new furniture outlets during the year. Comparable store sales growth was 3.4% for the last financial year. Last year’s dividend yield was 3.5% fully franked.

Reckon Limited (ASX: RKN) – Reckon has a total market capitalisation of $274 million. Reckon sells accounting software to small and medium-sized enterprises. A growing customer base that currently boasts over 300,000 customers and 30,000 online users is helping grow revenue each year. Last year’s dividend yield was 3.9% partly franked.

1300 Smiles Limited (ASX: ONT) – 1300 Smiles has a total market capitalisation of $182 million. An owner and operator of full-service dental facilities, it continues to seek opportunities for further expansion. Last year’s dividend yield was 2.7% fully franked.

Foolish takeaway

The small cap section of the market always carries a higher level of risk as compared to large cap blue chips. The upside is that small cap’s can generate higher rates of return, given they usually have more room to grow. And with the blue chips under-performing, Foolish investors seeking better returns might want to consider adding some small caps exposure to their portfolio.

Here Are 2 Top ASX Shares Warren Buffett Would Love…

Hot off the presses! The Motley Fool has just published a brand-new investment report and your copy is FREE. Click here to discover Warren Buffett's investing secrets and two top ASX shares Buffett could love! Your copy is free when you click here.

Motley Fool contributor Qaiser Malik has no position in any stocks mentioned. 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 has no position in any of the stocks mentioned. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!