The Motley Fool

3 small cap shares to give your portfolio a big lift

One of the goals that many investors have is to beat the return of the market each year.

In order to achieve this I think a little exposure to small cap shares can be very helpful.

After all, the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) has vastly outperformed its illustrious peer the S&P/ASX 200 significantly over the last 12 months.

During this time the small cap index has posted a gain of 18% compared to a 4.1% gain by the benchmark index.

With that in mind, here are three small cap shares that I think investors ought to consider snapping up and adding to a diversified portfolio today.

Money3 Corporation Limited (ASX: MNY)

I think that this financial services company is worth considering as an investment today thanks to the impressive performance of its secured auto loans business. For the first-half of FY 2018 Money3 reported a 12.3% increase in net profit after tax to $15.5 million due largely to an 18% increase in its gross loan book. Considering the company still only has a 2% share of the second-hand automotive finance market, I think Money3 has a long runway for growth ahead of it.

National Veterinary Care Ltd (ASX: NVL)

Considering the high levels of pet ownership in Australia and New Zealand and the frequency in which these pets visit a veterinary clinic, I think National Veterinary Care is well-positioned to profit in the long-term. Especially given that the industry is highly fractured and gives the company the opportunity to grow through acquisition. In the first-half of FY 2018 National Veterinary Care delivered a 27.6% increase in revenue to $41.6 million and a 27.7% lift in net profit after tax to $3.3 million.

Swift Networks Group Ltd (ASX: SW1)

This entertainment and telecommunication services company provides fully integrated solutions for the resources, hospitality, lifestyle village, and aged care accommodation sectors. I believe there is a huge opportunity for the company in the aged care sector due to Australia’s ageing population, which makes Swift Networks a great option for investors looking into the small cap space.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended Money3 Limited. 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 Scott Phillips.