3 small cap tech shares for your watchlist

I think at the small end of the Australian share market there are many shares with strong long-term growth potential.

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

Citadel Group Ltd (ASX: CGL)

Citadel is a software company that provides education and technology services that help individuals and organisations maximise value, innovation, and business outcomes in an information-driven world. In the first-half of FY 2018 demand for its services grew strongly and led to net profit after tax rising 22.8% to $6.6 million. The good news is that management appears confident that there will be more of the same in FY 2019 thanks to a positive outlook for renewals and a pipeline of new implementation and managed services contracts.

ELMO Software Ltd (ASX: ELO)

ELMO is a fast-growing tech company which provides integrated cloud-based human resources and payroll software solutions. I have been very impressed with its performance and the way it has outperformed its prospectus forecasts since it listed on the ASX. With the company cashed up after a recent capital raising and on track to achieve a 370% increase in EBITDA to $5.7 million in FY 2018, ELMO Software is certainly worth a closer look in my opinion.

Infomedia Limited (ASX: IFM)

Infomedia is a provider of software as a service solutions to the after sales parts and service sector of the automotive industry. Although the company posted a decline in net profit after tax in the first-half, its shares have recently hit a 52 week high. This is likely to be down to the positive impact that the Nissan global EPC contract delivery project will have on its business in the near future. Management expects revenue will start to be generated in the second-half of FY 2018 before accelerating into FY 2019.

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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 Citadel Group Ltd. 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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