I think the Australian share market is home to a good number of small cap shares that have the potential to grow materially larger in the future.
While history shows that not all small caps will ultimately deliver on their potential, I think many of these shares have what it takes to do so.
With that in mind, here are 10 small cap shares to add to your watchlist today:
Alcidion Group Ltd (ASX: ALC)
Alcidion is an informatics solutions company providing software which has been designed to improve the efficacy and cost of delivering services to patients and reduce hospital-acquired complications. It looks well-positioned thanks to the growing trend for healthcare organisations to shift to a paperless environment.
Audinate Group Limited (ASX: AD8)
Audinate is a digital audio-visual networking technologies provider. In FY 2019 it delivered a 44% increase in revenue to $28.3 million and 395% rise in EBITDA to $2.8 million. This was driven by the significant expansion of Dante product offering and increased adoption by Original Equipment Manufacturers (OEMs). I expect similarly strong growth in FY 2020.
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is a provider of enterprise mobility software. This software allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction through improved mobile worker productivity. Earlier this month it announced a three-year deal with sports giant Nike, which I feel bodes well for its performance this year.
Dubber Corp Ltd (ASX: DUB)
This Australian software company develops cloud-based technologies so that businesses and corporate clients can record, manage and analyse their phone calls and communications. In FY 2019 its revenues grew by 132% to $7.4 million thanks to a 222% increase in active customers. It looks like one to watch this year.
ELMO Software Ltd (ASX: ELO)
ELMO is a cloud-based human resources and payroll software company which provides a unified platform to streamline processes for employee administration, recruitment, on-boarding, learning, performance, remuneration, compliance training and payroll. It has been a strong performer since its IPO and looks well-placed to continue this positive form in FY 2020.
LiveTiles Ltd (ASX: LVT)
LiveTiles is a digital workplace platform provider that is aiming to simplify processes and enhance productivity through the creation of internal dashboards, intranet portals, and collaborative online working environments. It looks well-placed for growth thanks to increasing demand and its close ties with tech giant Microsoft.
Serko Ltd (ASX: SKO)
Serko is an online travel booking and expense management provider. Thanks to strong demand from new and existing customers, in FY 2019 Serko posted a 28% increase in total operating revenue to NZ$23.4 million. One key metric that stood out for me was that 88% of this revenue is recurring, which I feel gives it a firm foundation to build on in FY 2020.
Straker Translations Ltd (ASX: STG)
Straker Translations is a translation services platform provider that uses a combination of artificial intelligence and human intelligence to provide highly efficient language translation services at scale. Strong demand for its services led to it reporting an impressive 44% increase in revenue to NZ$24.6 million. Pleasingly, it has started FY 2020 just as strongly and reported first quarter cash receipts growth of 38%.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a provider of software that uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been a very impressive performer over the last few years thanks to the growing popularity of its software with radiologists across North America. I expect this positive form to continue this year, especially with the help of recent acquisitions.
Whispir (ASX: WSP)
Whispir is a recently listed software-as-a-service communications workflow platform provider which I think has a lot of potential. It provides an industry-leading software platform that allows governments and organisations to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. In FY 2019 it beat its prospectus forecasts with revenue up 12% to $31.1 million. It counts the likes of Disney and Foxtel as customers.
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
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 Alcidion Group Ltd, BIGTINCAN FPO, Serko Ltd, and VOLPARA FPO NZ. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool Australia has recommended Alcidion Group Ltd, BIGTINCAN FPO, LIVETILES FPO, People Infrastructure Ltd, Serko Ltd, Straker Translations, VOLPARA FPO NZ, and Whispir 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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