The Motley Fool

5 exciting small cap shares I’m watching very closely

Over the last 12 months the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) has managed to put on an impressive 19.5% gain, vastly outperforming its large cap rival the S&P/ASX 200.

I believe this gain demonstrates why having a little exposure to small-cap shares can be a good thing for a portfolio.

With that in mind, here are five small-cap shares which I think investors ought to be watching closely today:

Bubs Australia Ltd (ASX: BUB)

Bubs is a goat milk infant formula company which I believe has a lot of potential. I think FY 2019 will be a big year for the company after a solid 12 months which saw Bubs sign countless distribution agreements in China and Australia. This year the market will find out whether these agreements have resulted in a serious lift in sales.

Citadel Group Ltd (ASX: CGL)

Citadel is a growing software and services company that provides integration and managed services solutions to state and federal governments and the private sector in Australia. It is profitable, has strong growth prospects, and very little debt on its balance sheet.

LiveTiles Ltd (ASX: LVT)

LiveTiles is a fast-growing digital workplace platform provider which has caught my eye numerous times over the last 12 months. Most recently it was an announcement revealing a significant lift in annualised recurring revenues (ARR). According to the update, ARR reached $15 million as of June 30, up 275% on the prior corresponding period. In addition to this, the company was recently awarded the 2018 Microsoft US Partner of the Year Award for Modern Workplace Transformation.

Paragon Care Ltd (ASX: PGC)

This fast-growing provider of integrated services to the health and aged care markets recently announced the acquisition of specialised medical distribution company REM Systems for a net enterprise value of NZ$54.4 million. Management expects the acquisition to be highly accretive to earnings in FY 2019, which I think makes its shares great value at the current level.

Specialty Fashion Group Ltd (ASX: SFH)

This retailer looked like it could have been going out of business last year, but it has bounced back strongly in 2018. A successful structural review and the offloading of five retail brands to Noni B Limited (ASX: NBL) has left it with just its fast-growing City Chic brand. The brand’s attractive growth outlook has the market and myself bullish again.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.