If you're a fan of small cap shares, then you're in luck because I believe there are a number on the local share market that could provide strong returns for investors over the coming years.
Three small cap shares that I think are worth watching very closely in FY 2020 are listed below. Here's why I like them:
Serko Ltd (ASX: SKO)
Serko is a leading online travel booking and expense management provider. It recently released its full year results which revealed an impressive 28% increase in full year total operating revenue to NZ$23.4 million. One big positive in my opinion is the fact that just over 88% of this revenue is classed as recurring, which I feel gives the company a strong foundation to build its future growth on. Speaking of which, management appears confident that the strong growth will continue in FY 2020 and has provided total operating revenue growth guidance of between 20% and 40%.
Straker Translations (ASX: STG)
Another small cap tech share to watch is Straker Translations. As its name implies, Straker Translations is a translation services platform provider. However, it isn't your average translation service, it uses a combination of artificial intelligence and human intelligence to provide efficient language translation services at scale. It has also recently released its full year results, revealing a 44% increase in revenue to NZ$24.6 million. Pleasingly, Straker Translations looks well-placed to deliver more of the same in FY 2020, especially given its recent acquisition of On-Global. This acquisition gives the company access to a Spanish translation market estimated to be worth NZ$500 million per year.
Volpara Health Technologies Ltd (ASX: VHT)
A third and final small cap tech share to consider is Volpara. It is a medical technology company which provides software that uses artificial intelligence imaging algorithms that assist with the early detection of breast cancer. In FY 2019 Volpara posted a 78% increase in revenue thanks to its increasing market share in the United States. At the end of the period its market share had grown to 7.1%, up 120% from a 3.2% share a year earlier. Looking ahead, the company appears well-positioned to capture an even greater slice of the market next year thanks to the quality of the product, favourable regulatory recommendations, and its acquisition of US-based MRS Systems.
