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.
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.
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 its 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 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.