Small cap shares are certainly a riskier investment in comparison to their large cap peers, but they also offer the potential for much bigger returns.
So, if your risk tolerance allows the addition of one or two small caps to your balanced portfolio, I think the three shares listed below could be worth considering.
Here’s why I think they have bright futures:
LiveTiles Ltd (ASX: LVT)
LiveTiles provides a digital workplace platform that allows users to create dashboards, employee portals, and corporate intranets with ease. Due to the engagement of a dedicated sales force and its strong ties with global tech giant Microsoft, the company has grown its sales strongly again in FY 2019. In fact, LiveTiles more than tripled its annualised recurring revenue (ARR) to $34.5 million during the first three quarters of the financial year. The good news is that management appears confident that its strong growth can continue and is aiming to grow its ARR organically to $100 million by the end of June 2021.
PointsBet Holdings Ltd (ASX: PBH)
This recently listed corporate bookmaker could be one to watch. PointsBet offers innovative sports betting products and services direct to clients via a scalable cloud-based technology platform. Its offering includes fixed odds sports, fixed odds racing, and PointsBetting. I believe this unique offering has a lot of potential, especially in the massive U.S. market which the company is focused on after raising $75 million through its IPO.
Straker Translations Ltd (ASX: STG)
Another small cap share which I think has a lot of potential is Straker Translations. As the name implies, it is a translation company. However, it distinguishes itself from its competitors through its exciting translation services platform which uses a combination of artificial intelligence and human intelligence to provide highly efficient services at scale. In a recent presentation management revealed that its global market opportunity is expected to be worth US$66 billion per annum by 2022. Given the quality of its offering, I wouldn’t bet against the company winning a decent slice of this market over the next decade.
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Pointsbet Holdings 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.
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