Unless you follow the Australian share market very closely, chances are, you haven't heard of Pro Medicus Limited (ASX: PME) shares, Nearmap Ltd (ASX: NEA) shares and Adacel Technologies Limited (ASX: ADA) shares.
Why consider small cap shares?
If you are investing for the long-term — by that, I mean a minimum of five years — it makes sense to invest for growth. The small cap space — companies with a market capitalisation less than $1 billion — is the best hunting ground, in my opinion. Fewer analysts roam this terrain, with price-to-value mismatches common, and innovation abounds.
Here are three ASX shares that fit the bill.
Pro Medicus
I was lucky enough to see the co-founder and CEO of Melbourne-based medical imagery business, Pro Medicus, present to a group late last year. Unfortunately, with its share price up nearly 2000% in five years, I figured the best growth was behind it.
However, Pro Medicus could well go on to bigger and better things over the next five years. The company's Visage software allows radiologists and doctors to inspect extremely large and detailed medical images (think: X-rays, 3D images) from the palm of their hand — on a smartphone! The company's shares don't come cheap but for the long-term, I think it is certainly worthy of further research.
Nearmap
Another imagery business, Nearmap, does not boast the respectable track record of Pro Medicus. However, that could provide the opportunity which savvy investors have been waiting for. The $200 million Nearmap provides ultra-clear, regularly-updated aerial imagery solutions.
The company sells these images to businesses, governments and other parties looking for a regularly-updated bird's eye view. There are risks, of course. Google, owned by Alphabet Inc, has mapping technology which is getting better and better. However, Nearmap appears to be winning new clients from more regions because of its higher-quality and pure mapping service.
Adacel Technologies
Sticking with the theme of imaging and technology. Have you ever thought air traffic controllers have a stressful job? Well, Adacel provides the technology which makes their job possible.
The company specialises in simulation and control systems for airports and defence organisations. From voice-activated cockpits to training systems, Adacel may be a small company but it has a niche market and a highly dependable service to match.
