3 speculative small cap shares on my watchlist

I’m a big fan of small cap shares and believe a little exposure to this area of the market can be a great thing for a portfolio.

And while there are some high quality and profitable small cap shares like ELMO Software Ltd (ASX: ELO) that are investable right now, not all of them are ready to be invested in.

I think that the three small cap shares listed below have a lot of potential, but they are still very much at that speculative stage and should remain on your watchlist for the time being.

Bubs Australia Ltd (ASX: BUB)

I think that this goat milk infant formula company would have to be one of the most promising but high risk shares on the Australian share market. The company has signed countless distribution agreements that will allow it to reach millions of Chinese parents. But only time will tell whether the product resonates well with them in such a competitive environment. While it could become the next A2 Milk Company Ltd (ASX: A2M), it is too soon to know.

Lepidico Ltd (ASX: LPD)

Lepidico is a lithium-focused mineral exploration company which counts lithium giant Galaxy Resources Limited (ASX: GXY) as a major shareholder. As well as having a promising portfolio of assets, Lepidico also owns the technology behind a metallurgical process that has successfully produced lithium carbonate from non-conventional sources. Management believes that the L-Max process has the potential to disrupt the lithium market by providing additional lithium supply from alternative sources.

Longtable Group Ltd (ASX: LON)

Late last year this food company raised $43 million to fund the acquisition of leading biodynamic-organic dairy products company, B.-d Farm Paris Creek. This transformational acquisition adds to its interest in the Maggie Beer product range and could provide it with significant growth in the future. Especially given its relatively small distribution footprint and capacity to double its production after recent factory upgrades. In addition to this, the company has an experienced CEO in Laura McBain, who was previously in charge of Bellamy’s Australia Ltd (ASX: BAL).

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. 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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