The Motley Fool

5 small-cap shares I’m watching in FY 2020

I’ve not bought many new companies on the local sharemarket over the last 12 months as most of any research efforts are directed towards the US these days, however, there are a few small-cap businesses on the local market worth watching. 

The below list features different companies at different stages of development, from pre-revenue to profitable, and all carry a different level of risk. That being said, I’d still place all of them in the high-risk category, either due to their limited track records, financials or high valuations. As such, they’re probably only suitable for more sophisticated investors confident in their research if at all (for the record, I don’t own any of them).

Serko Ltd (ASX: SKO) is an NZ-based corporate travel management software business with a decent track record of growth. Serko is profitable, growing relatively quickly and the balance sheet is in reasonable shape with a cash balance of $15.7 million. 

EML Payments Limited (ASX: EML) is a payment solutions and software business that grew fiscal 2019 EBITDA 40% to $29.1 million on revenue up 37% to $97.2 million. It has cash on hand of $33.1 million and $15 million of debt. The stock hit a record high of $4.44 on the back of strong results and increased media and institutional investor attention. 

Alcidion Group Ltd (ASX: ALC) is a micro-cap healthcare software business that posted a marginal cash inflow of $282,000 on revenue of $16.9 million for fiscal 2019. The stock has been on a tear in 2019 up from 5 cents to 28 cents today.

Paradigm Biopharmaceuticals Ltd (ASX: PAR) is an osteoarthritis researcher that reported more positive results for its Zilosul drug today. It has around $72 million cash on hand for further clinical trials and is actively looking to partner with ‘big pharma’ to secure more funding and de-risk its business. 

Audinate Ltd (ASX: AD8) is an audio-technology software business that is also profitable and growing at strong rates, thanks to its market-leading technology and position. Shares are up around 120% in 2019, as more institutional investors buy into the company. The shares look a little expensive to me though. 

If you're after the stability of a blue-chip stalwart instead, don't miss the report below.

Here are The Motley Fool's Top 3 Blue Chip Shares for 2019 – NOW AVAILABLE!

You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.

So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!

Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...

While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...

Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.

You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!

Simply CLICK HERE FOR YOUR FREE REPORT!

Tom Richardson 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, AUDINATEGL FPO, and Serko Ltd. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia has recommended Alcidion Group Ltd, AUDINATEGL 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!