4 explosive small-cap shares at the top of my buy list in 2017

So far it has been another great year for Australian small-cap shares. Year to date the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) (ASX: XSO) is up 8%.

This is the same gain that the small-cap index provided investors last year and once again outperforms the illustrious S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

With a collection of high-quality growth shares within the small cap index, I feel reasonably confident that we will see more of the same in 2017. In light of this, four small-cap shares at the top of my buy list are as follows:

Bionomics Ltd (ASX: BNO)

This fast-growing biopharmaceutical company has a number of lucrative drugs in its pipeline. One in particular which I believe has huge potential is its BNC210 drug for the treatment of anxiety. Phase II trials revealed that the drug outperformed the current standard of care with no signs of sedation, memory impairment, addiction or loss of motor co-ordination. These side effects can occur with the use of benzodiazepines such as Lorazepam. According to management the anxiety disorders market is projected to reach US$18.2 billion by 2020.

Class Ltd (ASX: CL1)

Although its shares are up 76% this year, they have now fallen around 25% from their September high. I put this decline down to profit taking and believe it has created a great buying opportunity for investors with a long-term view. In the most recent quarter Class added 11,880 billable SMSFs to it Class Super platform. This brought the total to 122,494, which is the equivalent of a 20.9% market share.

Capilano Honey Ltd (ASX: CZZ)

This leading honey producer had a strong FY 2016 resulting in a 20.9% jump in net profit after tax to $9.5 million. As well as benefiting from the health and wellness boom, a good portion of Capilano Honey’s growth came from the China market. Sales in the country grew 56.9% year on year. I expect this strong performance to continue for a number of years to come, making it a great buy and hold investment. Especially at just 16x full year earnings.

MNF Group Ltd (ASX: MNF)

MNF Group is a founder-led provider of voice-based internet communications with ambitions to become a leading global provider of wholesale voice minutes. In FY 2016 MNF Group reported record full year EBITDA of $17.8 million. Up an impressive 46% on last year. The good news is that as well as looking for earnings accretive acquisitions, management is confident of another year of solid organic growth in the year ahead.

The only problem with the four small-cap shares above is that they don't at this point provide investors with strong dividends. So if you're looking for dividends then look no further than what could be the hottest dividend stock of 2017.

HOT OFF THE PRESSES: Motley Fool's #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this 'under the radar' consumer favourite is both a hot growth stock AND our expert's #1 dividend pick for 2017. Now we're pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is click the link below!

Simply click here to receive your copy of our brand-new FREE report, "The Motley Fool's Top Dividend Stock for 2017."

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Capilano Honey Limited and Class Limited. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.