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Why you should add these 4 emerging shares to your watch list today

Whilst most investors will focus on Australia’s biggest 200 companies included in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), it’s possible to have more success by investing in Australia’s emerging companies.

So far in 2016 the S&P/ASX 200 has suffered a disappointing time and dropped by 1.4%. In comparison the S&P/ASX Emerging Companies (Index: ^AXEC) (ASX: XEC) index has surged higher by a massive 27%.

The good news is that I don’t believe it is too late to invest in many of these companies. Here are four emerging companies which I feel are well worth adding to your watch list.

Appen Ltd (ASX: APX)

Appen is a global leader in speech and search technology services, with expertise in over 150 languages. It counts some of the biggest tech companies in the world such as Facebook and Microsoft amongst its growing client list. Appen recently reported a 102% increase in half year net profit to a record $5.4 million. With strong growth prospects and a debt-free balance sheet, Appen could be a great long-term investment.

MNF Group Ltd (ASX: MNF)

This founder-led provider of voice-based internet communications has ambitions to become a leading global provider of wholesale voice minutes. Last month it posted full year net profit of $9 million on revenue of $161.2 million. This was an impressive 88% increase in sales and 22% in net profit. I believe MNF Group has a bright future ahead of it and is well worth a closer look.

Nearmap Ltd (ASX: NEA)

Although this growing aerial imaging company delivered a disappointing full year result, I believe there are signs of progress being made in the potentially lucrative US market. Ultimately the success of its US operations are likely to make or break the company. I was pleased to see revenue growth accelerated in the US in the second half and all being well this momentum will be carried through into FY 2017.

Xenith IP Group Ltd (ASX: XIP)

Xenith IP is a provider of a range of intellectual property services for thousands of clients across the globe. At the end of August the company reported full year results which smashed prospectus forecasts. On the bottom line pro forma net profit after tax came in at $6 million, up 71% on FY 2015 and 28% on its prospectus forecast. At just 12x full year earnings it looks extremely cheap in comparison to its larger industry rival IPH Ltd (ASX: IPH), which trades at 21x earnings currently.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.