3 small-cap shares that need your attention

These fast-growing, small-cap shares are still flying under the radar of most investors.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Although small-cap shares have underperformed the broader market over the past few months, I still think this is an area of the market where investors can generate very good long-term returns.

In addition to their better growth prospects, many small-cap shares are also trading at more attractive valuations compared to their larger counterparts.

With that in mind, here are three small-cap shares that I think are worthy of a closer look:

Zenitas Healthcare Ltd (ASX: ZNT)

Zenitas Healthcare re-listed on the ASX in January 2017 and is a $47 million community healthcare company that operates in three main markets – allied health, home care and primary care. It currently operates across 54 locations and employs around 760 healthcare professionals. The company is expected to rapidly grow its network through an acquisition strategy as a result of the fragmented nature of the markets it operates in. At its first-half results, Zenitas confirmed it remains on track to meet its prospectus forecasts for pro-forma EBITDA of $6.6 million.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price has fallen nearly 40% from its 52-week highs after the company warned that investors should expect to see comparable sales growth to moderate over the remainder of the financial year. While this was disappointing, the baby retailer is still expected to deliver very strong earnings growth on the back of new store openings and mid-single-digit same store sales growth. I would like to see a further update from Baby Bunting before buying the shares, although they are beginning to look quite attractive at less than $2 apiece.

Apollo Tourism & Leisure Ltd (ASX: ATL)

Apollo Tourism and Leisure has only been listed since November 2016 but has so far shown some very promising signs. The $200 million company manufactures, rents, sells and distributes a range of recreational vehicles (RVs), campervans and caravans across Australia, New Zealand and North America. This area of the market is expected to grow quite strongly over the coming years as the baby boomer generation increases its spend on travel and leisure pursuits. Although the outlook for the company is positive and the shares are currently trading at just 16x earnings, I would like to see a reduction in the company's debt levels before buying the shares.

Motley Fool contributor Christopher Georges 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.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »