3 small cap growth shares with bucketloads of potential

One thing that Australian investors are not short of in my opinion is quality options in the small cap space.

I think at the small end of the market there are a good number of shares with bucketloads of growth potential.

Three that I think investors should be keeping a close eye on are listed below. Here’s why I like them:

Bubs Australia Ltd (ASX: BUB)

This goat milk infant formula and baby food company is aiming to be the next A2 Milk Company Ltd (ASX: A2M) or Bellamy’s Australia Ltd (ASX: BAL). While I have found its sales growth thus far to be underwhelming, it is early days and Bubs has recently signed numerous distribution agreements that will significantly expand its footprint in China. I’m holding off investing until I’ve seen proof that there is demand for its products in the lucrative market.

ELMO Software Ltd (ASX: ELO)

One of my favourite shares at the small end of the market is this cloud-based talent management software solutions provider. ELMO has been experiencing strong demand for its services over the last 12 months, meaning it is on course to achieve total revenue of $31.2 million and EBITDA of $5.7 million in FY 2018. This is significantly higher year-on-year and well above its prospectus forecasts. As well as this, a recent $46 million capital raising gives ELMO a strong cash balance and the flexibility to make earnings accretive acquisitions in the future.

Livetiles Ltd (ASX: LVT)

LiveTiles is a fast-growing digital workplace platform provider which is targeting a leadership position in the massive artificial intelligence market. The company has made big strides towards achieving this goal in recent months through the signing of AI-related deals with tech giant Microsoft and the Clean Energy Smart Manufacturing Innovation Institute. It is still early days, though, and there’s a long road ahead.

But it isn't just Bubs, ELMO, and LiveTiles, these exciting shares could also have extremely bright futures ahead of them.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

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 A2 Milk. 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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