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5 small cap shares to watch in August

top 5, 5, five

While small cap shares are certainly high up on the risk scale, I believe a little exposure to them can be a good thing for a portfolio.

After all, the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) has vastly outperformed the All Ordinaries over the last 12 months with its 19% gain.

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

Citadel Group Ltd (ASX: CGL)

This under the radar tech share is a specialist in secure enterprise information management. It helps manage information across the health, national security, and defence industries as well as other government departments like education. Which is certainly an in demand service considering how important data security is in the information age.

ELMO Software Ltd (ASX: ELO)

ELMO Software is a leading provider of integrated cloud human resources and payroll software solutions. It provides businesses with a centralised approach that manages an employee’s lifecycle from hire to retire. While its growth since its IPO has been impressive, it is still only scratching at the surface of an ANZ market opportunity estimated to be worth upwards of US$770 million per year.

LiveTiles Ltd (ASX: LVT)

LiveTiles is an exciting digital workplace platform provider which is aiming to become a leader in the artificial intelligence industry. It recently announced annualised recurring revenues of $15 million as of June 30, up 275% on the prior corresponding period. I feel its partnership with Microsoft and the appointment of a dedicated sales and marketing team is likely to lead to further strong growth in FY 2019.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health Technologies is a tech company specialising in breast imaging analytics and analysis software. It recently released its first-quarter results which revealed a 3.7% share of the U.S. market. Management aims to grow this to 9% by the end of FY 2019. Due to the quality and popularity of its product, I suspect it will achieve this.

Zenitas Healthcare Ltd (ASX: ZNT)

Zenitas Healthcare is a home care and health services company which I believe could benefit greatly from Australia’s ageing population. Especially given its solid growth prospects from two recent earnings accretive acquisitions and a Federal Budget which pledged to support older Australian’s wishing to live at home instead of in aged care facililties.

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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 and VOLPARA FPO NZ. The Motley Fool Australia owns shares of Citadel Group Ltd. The Motley Fool Australia has recommended Zenitas Healthcare 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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