MENU

3 small caps trading at attractive prices

Businesses with small capitalisations are inherently riskier, but also offer much more potential growth simply because of their size.

The share prices of small caps have larger price swings up and down than large blue chips because of the small numbers of buyers & sellers and smaller number of shares being sold.

Here are three small caps I have my eye on that are trading at a low price:

Pureprofile Ltd (ASX: PPL)

Pureprofile is an internet based survey company with a market capitalisation of $41 million.

The idea behind Pureprofile is to create a large database of people which would be representative of the population. It offers its database to government bodies, businesses and charities to run a survey to see what they think of a new product, service, policy or anything else a survey can be about.

Pureprofile runs the survey and helps the entity understand the results. This can be a powerful method of market research when a business can make changes to an advertising campaign and ask the same people for their new perspective.

It operates in Australia, Europe and North America and is expanding all three operations.

Pureprofile isn’t yet making a statutory profit and doesn’t pay a dividend, however it made a pro forma profit of $1.6 million after excluding acquisition costs in its results to 31 December 2016.

Freelancer Ltd (ASX: FLN)

Freelancer is one of the biggest online portals in the world connecting freelancers with employers offering projects for money. It currently has a market capitalisation of $404 million.

It has taken a while for the business to grow its number of users and presence. It has to generate a lot of revenue to make up for the amount it is spending on advertising and research & development, so it is now just reaching profitability.

In its full-year results to 31 December 2016 it revealed that operating net profit after tax was $0.1 million, which excludes share based payments.

This means that most of the future revenue (with a gross profit margin of 87%) should fall to the company’s bottom line and the profit should grow at a quick rate from now on.

Freelancer isn’t yet making a statutory profit or paying a dividend.

Buymyplace Ltd (ASX: BMP)

Buymyplace is an internet-based company that allows people to sell their property without needing an agent. It currently has a market capitalisation of $11 million.

Selling through a traditional agent can cost many thousands of dollars and some vendors would prefer to keep as much of the sale price as they can.

Buymyplace reported that its revenue for the six months to 31 December 2016 grew by 129% compared to the prior corresponding period. It isn’t yet making a profit or paying a dividend.

Foolish takeaway

I like the idea of all three of the above businesses. Buymyplace may be a little too speculative at this stage, but Freelancer could turn into a future blue chip of Australia, whilst Pureprofile’s underlying business is already profitable.

At the current prices, Freelancer would be my favourite to buy of the three.

For much more reliable growth than small caps, you should check out our favourite three growth stocks of 2017.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison 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.

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.