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3 exciting small cap ASX shares to watch in May

man peering closely at computer screen, watching ASX 200 share prices
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I think there are a number of shares at the small end of the market that have significant long term growth potential.

Three which I think are well worth keeping a close eye on are listed below. Here’s why I like them:

Citadel Group Ltd (ASX: CGL)

Citadel is a software and services company specialising in secure information management in complex environments. Its shares came under pressure earlier this year after its first half revenue growth disappointed. However, I believe this was an overreaction and has created a buying opportunity for investors. The slowdown in revenue growth was the result of Citadel transitioning its sales focus towards scalable solutions that provide annuity revenue streams. In light of the transition, I feel investors should be focusing on its SaaS revenue growth metric, which increased 39.1% during the first half.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally and has been benefiting greatly from the ongoing migration to cloud infrastructure by enterprises. It recently released its third quarter global update which revealed another quarter of strong growth. Megaport reported a 7% increase in customer numbers to 1,367 and a 15% lift in monthly recurring revenue (MRR) to $3.11 million. And with the cloud computing boom accelerating, I believe the company is well-positioned to continue growing at a strong rate for many years to come.

Serko Ltd (ASX: SKO)

Serko is a travel and expense technology solutions provider which I think is worth watching very closely. Its online booking tool provides clients, such as travel agent giant Flight Centre Travel Group Ltd (ASX: FLT), with access to a wide variety of travel providers including low cost carriers. In the first half of FY 2019 the company delivered a 25% increase in operating revenue to NZ$11.4 million. Management expects more of the same in the second half and has provided revenue growth guidance in the range of 20% to 30%.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Citadel Group Ltd, MEGAPORT FPO, and Serko 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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