2 small-cap technology shares I’d buy today

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The Class Ltd (ASX: CL1) share price and Integrated Research Limited (ASX: IRI) share price leave could have room to run over the next five years.

Indeed, if I was thinking of buying technology shares for the next five years I would turn my attention away from all the usual names like REA Group Ltd (ASX: REA), Carsales.Com Ltd (ASX: CAR) and Seek Limited (ASX: SEK). Instead, I would opt to do a little more research on these two up-and-coming software businesses.


Class Ltd develops software for self-managed superannuation funds (SMSFs). Like Xero FPO NZX (ASX: XRO) Class’s Super and Portfolio programs are found in the cloud, meaning they can be accessed from anywhere with almost any device.

Class Ltd shares are up around 110% since late 2015, however, it is still a small company given its market capitalisation currently stands at $344 million. Despite its growth potential, Class shares also offer a handy 1% franked dividend yield.

Integrated Research

The only thing better than a cure is prevention. Integrated Research has developed software that bolts onto a company’s existing computer systems, for diagnosis and security. It also has a growing payments business. Recently, the company’s CEO stepped aside for personal reasons, which is never welcome news for investors.

However, Integrated Research’s software is sticky, resulting in revenue that is recurring. This has enabled it to pay a growing dividend to shareholders over time. While shares appear a little pricey, I think it deserves a closer inspection in 2017.

Foolish takeaway

If you are looking for the next wave of growth, I think there are better opportunities further down the market. In my opinion, both of these companies are higher-risk investments. However, with a view to the long-term (five years or more) I think they could be rewarding investments

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen encourages your feedback. You can follow him on Twitter @OwenRask.

The Motley Fool Australia owns shares of Class Limited and Xero. 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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