3 stellar ASX small cap shares with enormous potential

Afterpay Touch Group Ltd (ASX:APT) and Appen Ltd (ASX:APX) were small caps once. Could these shares follow in their footsteps to a large cap future?

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The small cap side of the market is certainly higher up the risk scale. But I believe a little exposure to it can be a good thing for a portfolio if your risk profile allows for it.

You only need to look at the returns that have been generated by the likes of Afterpay Touch Group Ltd (ASX: APT) and Appen Ltd (ASX: APX) in recent years to see why.

Both companies were classed as small caps just a few years ago, whereas now they are multi-billion corporations.

While only a handful of small caps will fulfil their potential and follow in the footsteps of Afterpay and Appen, I believe there are a few that have a better chance than others.

Three small cap ASX shares that I think could be long-term market beaters are listed below. Here's why I like them:

Dubber Corp Ltd (ASX: DUB)

Dubber is an Australian software company which is developing cloud-based technologies. These technologies allow businesses to record, manage and analyse phone calls and communications. In FY 2019 its revenues grew by 132% to $7.4 million thanks to a 222% increase in active customers. Although its recent first quarter revealed a slowdown in its growth, this appears to have been a timing issue. The remainder of FY 2020 looks set to be far stronger for Dubber, making it one to watch closely.

Serko Ltd (ASX: SKO)

One of my favourite small cap shares is Serko. It is an online travel booking and expense management provider which has been growing at a very strong rate over the last couple of years. Pleasingly, thanks to the quality of its offering, its blue chip clients, and a recent capital raising which was supported by Booking.com, I believe it is well-placed to continue its meteoric growth for some time to come.

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 growing at an explosive rate over the last few years thanks to the increasing popularity of its software with radiologists across North America. Thanks to the quality of its software and the benefits of recent acquisitions, I believe it is well-placed to continue this strong form in FY 2020 and beyond.

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 AFTERPAY T FPO, Serko Ltd, and VOLPARA FPO NZ. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Serko Ltd and VOLPARA FPO NZ. 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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