Although small cap shares carry a lot of risks, I think if your risk profile allows it, they can be a great addition to a balanced portfolio.
After all, you only need to look at the performance of the Small Ordinaries (Index: ^AXSO) (ASX: XSO) over the last three years to see this.
During this time the Small Ordinaries has gained 23%, compared to a 12% gain by the All Ordinaries.
With that in mind, here are three small cap shares I think could be worth looking closer at:
Audinate Group Limited (ASX: AD8)
Audinate is a digital audio company that develops hardware and software solutions for the professional audio-visual industry. The company was a strong performer in FY 2018, growing full year revenue by 30% to $19.7 million. Pleasingly, this strong form has continued in FY 2019 with a record first quarter result. Last week management advised of first quarter cash collections of $6.8 million, up 51% on the prior corresponding period. This was driven by solid core chips, cards and modules sales, along with strong demand for AVIO adapters.
Paragon Care Ltd (ASX: PGC)
Another small cap share worth considering is this integrated services provider to the healthcare and aged care markets. As well as operating in two markets that are expected to grow strongly over the coming years, Paragon Care has opportunities to accelerate its growth through acquisitions after a recent $45.2 million placement. This should put it in a position to continue growing its dividend, which currently provides a trailing fully franked 4.5% yield.
Serko Ltd (ASX: SKO)
This New Zealand-based travel and expense technology solutions provider is a recent listing on the Australian share market. I’ve been impressed with what I’ve seen since its listing and believe it could be worth a look. Serko’s services are used by a growing number of companies in the travel industry including travel agent giant Flight Centre Travel Group (ASX: FLT). This year the company is expecting to deliver revenue growth of up to 30%.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and Flight Centre Travel Group Limited. 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.
- Is the Coles (ASX:COL) share price in the buy zone? – October 30, 2020 4:54pm
- Why the Carsales (ASX:CAR) share price dropped 4% today – October 30, 2020 4:19pm
- Why the Medical Developments International (ASX:MVP) share price is tumbling lower – October 30, 2020 3:53pm