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3 small cap tech stars to buy this month

While Australia’s tech sector pales in comparison to those in the United States, Europe, and China, that doesn’t mean there aren’t any up and coming tech companies worth investing in.

Three small cap tech shares that I think are worth considering are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

The main attraction to this fintech company for me is its increasingly popular wealth management software product Sonata. Demand for the solution has been growing so strongly that as of its half-year results, the product accounted for 55% of its total revenue. Unsurprisingly, this strong growth has led to its shares rocketing higher. Pleasingly, though, I think they are still great value at 22x trailing earnings. Especially considering management expects full-year underlying earnings per share growth in the high-teens in FY 2018.

ELMO Software Ltd (ASX: ELO)

ELMO is a fast-growing cloud-based talent management software solutions provider which has been smashing expectations. In February the company reported pro forma earnings before interest, tax, depreciation, and amortisation (EBITDA) of $1.2 million on revenues of $10.6 million. This was an impressive 151% and 36% increase, respectively, on the prior corresponding period. This strong performance allowed the company to raise $45 million through an institutional placement last month. The funds will be used for future acquisitions, to strengthen its balance sheet, and for general corporate purposes.

Gentrack Group Ltd (ASX: GTK)

I think that this billing software provider could be a great option for investors. Gentrack provides its software to airports, water, and electricity companies, generating recurring revenues from annual fees, support services, and project services. Last month the company announced a new deal with E.ON, one of the world’s largest energy utility service providers. The contract focuses on the delivery of its Velocity software to support E.ON’s energy supply business in the UK and Romania. Gentrack has had a lot of success in the UK and now provides its software to 38 energy utility customers in the region.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended ELMOSFTWRE FPO. The Motley Fool Australia owns shares of Bravura Solutions Ltd. The Motley Fool Australia has recommended GENTRACK FPO NZ. 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.

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