If your risk profile allows it, I believe having a little exposure to small cap shares can give your portfolio a major boost, especially if you can unearth a future star.
Three top small cap shares which I think have a great deal of potential are listed below. Here’s why I like them:
LiveTiles Ltd (ASX: LVT)
LiveTiles is a small cap tech share which I think could have a very bright future ahead of it. It provides a digital workplace platform which allows users to easily create dashboards, employee portals, and corporate intranets. Sales of its software have continued to grow exceptionally strongly this year thanks to the engagement of a dedicated sales force and its strong ties with global tech giant Microsoft. This led to LiveTiles tripling its annualised recurring revenue (ARR) to $34.5 million during the first three quarters of FY 2019. The company isn’t resting on its laurels, though. It is targeting $100 million in ARR by the end of June 2021.
Serko Ltd (ASX: SKO)
Serko is a fast-growing provider of online travel booking and expense management software. It was a very impressive performer in FY 2019, reporting a 28% increase in its full year total operating revenue to NZ$23.4 million. This strong top line growth was driven by increasing demand for its services from some of the largest companies in the ANZ region. Another big positive was that ~88% of its operating revenue is classed as recurring, which gives the company a very strong foundation to build its future growth on. In FY 2020 the company expects total total operating revenue growth in the region of 20% to 40%.
Straker Translations Ltd (ASX: STG)
Straker Translations is an exciting translation services platform provider which uses a combination of artificial intelligence and human intelligence to provide highly efficient services at scale. In FY 2019 the company continued to experience strong demand for its offering, leading to the company reporting an impressive 44% increase in revenue to NZ$24.6 million. This is still only scratching at the surface of a global market opportunity which is expected to be worth US$66 billion per annum by 2022.
And here is another small cap share that has been tipped for very big things thanks to its massive US$22 billion market opportunity.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Serko Ltd and Straker Translations. 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.