I believe the Australian share market is home to plenty of small cap shares with significant long-term growth potential.
But while some are profitable and ready to be invested in like ELMO Software Ltd (ASX: ELO, not all of them are ready for investment.
For example, the three small cap shares listed below have a lot of potential, but they are still at the speculative stage and should remain on your watchlist for the time being in my opinion.
Bubs Australia Ltd (ASX: BUB)
There are a good number of companies aiming to be the next A2 Milk Company Ltd (ASX: A2M), but leading them all would have to be Bubs in my opinion. Thanks to key distribution agreements with major e-commerce giants and mother and baby stores, I believe Bubs has positioned itself perfectly to compete with the big boys with its goat milk offering. The big question, though, is whether there is demand for its products. Its sales have been a touch underwhelming thus far, which is why I think it should stay on watchlists for the time being.
Fastbrick Robotics Ltd (ASX: FBR)
Fastbrick Robotics is the robotics company responsible for the impressive Hadrian-X bricklaying robot. The technology has gained a lot of attention over the last 12 months and a number of MOUs have been signed. In addition to this, last week it announced an agreement that will see it explore the Mexican market opportunity with a local property group. I think Fastbrick Robotics could have a very bright future ahead of it. However, it is early days and I would suggest investors wait to see if these agreements turn into sales before investing.
Longtable Group Ltd (ASX: LON)
This food company has a market capitalisation of $89 million after raising $15 million at 70 cents per share last week. Those funds were raised to acquire inner-city premium dairy company St David Dairy and complemented last year’s major acquisition of leading biodynamic-organic dairy products company, B.-d Farm Paris Creek. CEO Laura McBain, who was previously in charge of Bellamy’s Australia Ltd (ASX: BAL), believes that these acquisitions have positioned Longtable well for long-term growth. This could make it worth taking a closer look.
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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 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.