I believe there are many shares at the small end of the market with the potential to grow significantly in the future.
Three that I think deserve to at least be on your watchlist today are listed below. Here’s why they could be stars of the future:
Capilano Honey Ltd (ASX: CZZ)
This leading honey producer has a market capitalisation of approximately $163 million. The company has its eyes firmly set on the lucrative China market and has been investing heavily in order to boost sales in the country. This included appointing a marketing executive team with a wide breath of experience in marketing health-focussed products to China and cross border ecommerce. If Capilano can crack the China market, then there could be a significant runway for growth ahead of it. I think this makes it worth keeping a close eye on.
Citadel Group Ltd (ASX: CGL)
Citadel is a software company specialising in secure enterprise information management and is currently valued at approximately $300 million. I think Citadel is a very interesting company and one that is certainly deserving of a spot on most watchlists. The company provides education and technology services to help individuals and organisations maximise value, innovation and business outcomes in an information-driven world. Demand for its services has been growing and led to net profit after tax rising 22.8% in the first-half to $6.6 million. And with management confident in its FY 2019 renewals and possessing a strong pipeline of new implementation and managed services contracts, I expect this strong growth could continue for the foreseeable future.
Paragon Care Ltd (ASX: PGC)
This fast-growing provider of integrated services to the health and aged care markets has a market capitalisation of just under $250 million. The company’s market value was given a boost last week after it announced a major acquisition that is expected to be highly accretive to earnings. Paragon Care agreed to acquire New Zealand-based specialised medical distribution company REM Systems for a net enterprise value of NZ$54.4 million. As I’m quite bullish on the healthcare sector due to ageing populations, I think Paragon Care could be worth a closer look. Especially considering its shares change hands on a reasonably undemanding 15x estimated forward earnings.
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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 Capilano Honey Limited and Citadel Group Ltd. The Motley Fool Australia has recommended Paragon Care 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.