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3 small-cap shares I WISH I bought

Gentrack Group Ltd (ASX: GTK) shares, Austock Group Limited (ASX: ACK) shares and Pro Medicus Limited (ASX: PME) shares are on my watchlist.

Gentrack Group

Gentrack Group is one of my favourite software businesses on the ASX. The Kiwi company provides billing and other critical software solutions for energy and water utility companies, and airports.

Despite its defensive qualities, including a 2.6% dividend, the $360 million company has grown strongly in recent times, with its share price up 71% in a year. The recent rise makes me annoyed that I didn’t buy in when it first came across my radar. However, I think long-term investors seeking income and growth could do worse than put Gentrack shares on their watchlist.

Austock

Austock is an $80 million finance business. Specifically, it is one of the largest providers of ‘investment bonds’, also called ‘insurance bonds’. Investment bonds can be a confusing product to get your head around, at first, which is why many bonds are sold through financial planning networks.

However, outside of superannuation, which is constantly being meddled with by the government, I believe investment bonds are the best vehicle — by that I mean the most tax-effective — to grow wealth over 10 years or more. That’s because investments made inside an investment bond are completely tax-free after 10 years. For example, you could buy into a Vanguard index fund inside a bond, let it increase, and redeem it tax-free in a decade.

I have not bought shares in Austock because there have been some ‘curious’ changes to the management of the company, and I haven’t been able to understand why. Nonetheless, I have it on my watchlist. Austock shares are up 860% in five years.

Pro Medicus

Pro Medicus shares have gone nuts over the past five years — up 1,900% — which is why I’m kicking myself for holding off buying in.

Pro Medicus is a $570 million software business that specialises in the sending and receiving of medical images, like X-rays. Doctors and radiologists can send and receive these huge files on their smartphone and diagnose patients almost instantly.

The company has signed a number of large hospitals and respectable clients, thanks to its superior product and quality management. Pleasingly, the company’s management team are strongly aligned with individual shareholders.

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

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.

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