Although small cap shares are riskier than their blue chip peers, I believe a little exposure to them can be a good thing for a portfolio.
Especially if you can pick out one with mid cap or even large cap potential.
Three which I think can grow strongly over the next decade are listed below. Here's why they could be worth a closer look:
Atomos Ltd (ASX: AMS)
Atomos is a global video technology company which enhances video content creation by producing monitor-recorder products that connect the imaging and computer worlds together. On Thursday it released its half year results which revealed a 32% increase in revenue to $24.2 million and a 194% lift in EBITDA to $0.7 million. This has put the company in a great position to beat its full year revenue guidance of $42.25 million, which would be an 18.5% increase on last year's result. And with the likes of Netflix, Amazon and Apple intending to increase their original content spend significantly over the next three years, I believe Atomos' technology could continue to experience strong demand over the coming years.
Audinate Group Limited (ASX: AD8)
Audinate is a digital audio company focused on bringing the IT revolution to the audio-visual industry. Its key Dante product distributes audio signals across computer networks and is being used in thousands of installations globally. Demand for Dante has been growing strongly and led to the company reporting a 60% increase in half year revenue to $14.2 million in the first half of FY 2019. Pleasingly, half year EBITDA came in at $1.7 million, which was up from $0.1 million in the prior corresponding period. This was driven by the strong revenue growth combined with operating leverage in the cost base flowing through.
LiveTiles Ltd (ASX: LVT)
LiveTiles is a digital workplace platform provider worth keeping a close eye on. Thanks partly to the engagement of a specialist sales force, in the first half of FY 2019 LiveTiles posted a 232% increase in annualised recurring revenue (ARR) to $22.9 million. This strong growth is expected to continue over the medium term with management aiming to organically grow its ARR to at least $100 million by June 30 2021. Due to its ongoing high-impact campaigns and joint-marketing initiatives with global tech giant Microsoft, I feel LiveTiles has a good chance of achieving this lofty goal.
