7 small cap bargains I'd buy right now with $7,000

These 7 small cap stocks could generate substantial growth for your portfolio

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Looking to jump into some stocks that could generate huge growth for your portfolio?

These seven stocks are all flying under the radar of mainstream analysts, yet their relative valuation ratios mostly suggest they are cheap.

Company Last Price Market Cap ($m)
Fiducian Group Ltd (ASX: FID) $2.95 $91.9
OTOC FPO (ASX: OTC) $0.34 $93.6
Joyce Corporation Ltd (ASX: JYC) $1.32 $36.4
FSA Group Ltd (ASX: FSA) $1.19 $148.9
Dicker Data Ltd (ASX: DDR) $1.79 $286.0
ICSGlobal Ltd (ASX: ICS) $1.65 $17.5
Tamawood Limited (ASX: TWD) $3.55 $90.7

Fiducian and OTOC reported yesterday, and their results were outstanding.

Fiducian, the wealth management business, yesterday reported a 22% increase in underlying net profit to $7 million for the 2016 financial year (FY16), and a 25% increase in its dividend to 12.5 cents. The company also has $9.7m of cash in its bank account and trades on an undemanding P/E ratio of 13x.

OTOC offers surveying, planning and design services to many sectors including government. The company also reported yesterday and delivered a 246% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $16.2 million as revenues went close to doubling compared to FY15.

Dicker Data and Tamawood we have both covered in more detail previously, but the former still trades on a prospective P/E of ~11.6x and Tamawood recently reported double-digit growth in earnings per share.

Joyce and FSA group I covered in more detail last month, but both still look attractive at current prices.

ICSGLobal is a software business primarily supplying billing software in the UK for healthcare professionals. At its half year result earlier this year, ICSGLobal saw profit increase 30%, and upped its interim dividend by 33% and still trades on a prospective P/E ratio of around 14.6x.

Foolish takeaway

Focusing on the smaller end of the market can see investors thrash the overall market return, as smaller companies have the ability to generate enormous growth the big end of town simply can't.


Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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.

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