Although not as widely known or followed as its illustrious bigger brother, I believe the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) is home to a number of quality companies with significant long-term growth potential.
Two which I believe are worth considering today are listed below. Here's why I like them:
Bapcor Ltd (ASX: BAP)
With its shares down by approximately 12% year-to-date, I think now could be an opportune time to snap up the shares of this automotive aftermarket parts retailer. Especially as its shares are changing hands at just 22x annualised earnings now.
I feel this is cheap for a company that delivered half-year pro forma net profit after tax growth of 44%. Whilst this level of growth is unlikely to be sustained in the long-term, thanks to its market-leading position, store network expansion, and the Hellaby's acquisition, I believe the company is capable of above-average earnings growth for the foreseeable future.
Collins Foods Ltd (ASX: CKF)
Collins Food is best known as a major operator of KFC restaurants throughout Australia. The company recently reported a solid FY 2017 result which saw underlying net profit after tax rise 14.1% to $34.3 million. This was driven by its international expansion and positive comparable store sales growth in the domestic market.
As well as the result, the company also announced plans to acquire a further 28 KFC restaurants based across South Australia, Tasmania, and Western Australia. This acquisition increased its national restaurant count to 223 KFC restaurants. But its store expansion has by no means finished. Management intends on expanding its footprint both at home and abroad each year through new store openings for the next few years at least. I believe this should allow the company to continue to grow earnings and its dividend at a solid rate for some time to come.
