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3 top small cap shares on my shopping list

Although the small side of the market is higher up the risk scale and unsuitable for some investors, I believe it is well worth getting a little exposure to it if your risk profile allows.

Especially considering the Small Ordinaries has outperformed the S&P/ASX 200 by a wide margin over the last 12 months.

Three top small cap shares that I think are worth a closer look are listed below:

Noni B Limited (ASX: NBL)

This fashion retailer’s shares have been on a tear over the last 12 months but still look to be great value. In fact, if the company’s acquisition of a number of brands from Specialty Fashion Group Ltd (ASX: SFH) proves to be a success then its shares could be prove to be cheap at this level. Although these brands have been underperforming for Speciality Fashion, Noni B has a strong track record of turning around failing retail brands and making them profitable. I expect it to accomplish this with these brands, setting it up for strong earnings growth for the next couple of years at least.

Paragon Care Ltd (ASX: PGC)

This provider of integrated services to the health and aged care markets is one of my favourite small cap shares in the healthcare sector. Management has been on a shopping spree this year and made no less than 10 acquisitions which are expected to be significantly accretive to earnings. One of those acquisitions was New Zealand-based REM Systems which it picked up for NZ$54.4 million. If management can integrate these businesses successfully then I expect Paragon Care to be positioned perfectly to deliver above-average growth for the foreseeable future.

Volpara Health Technologies Ltd (ASX: VHT)

This healthcare technology company has been a strong performer over the last 12 months thanks to the growing popularity of its breast imaging analytics and analysis software. The regulatory cleared and patent protected software is rapidly disrupting the U.S. healthcare market and now commands a market share of 3.7%. Management is confident that it will grow its share of the market to 9% by the end of FY 2019, which should lead to another strong rise in its annual recurring revenues. In FY 2018 Volpara finished the year with annual recurring revenues of $3.6 million, up an impressive 223% on the prior corresponding period.

Looking for more small cap ideas? Then don't miss out on these future stars.

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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 VOLPARA FPO NZ. 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.

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