I think a little exposure to the small side of the market can be a good thing for a portfolio.
This is because even blue chip companies such as Ramsay Health Care Limited (ASX: RHC) and TPG Telecom Ltd (ASX: TPM) were small caps at one stage.
Anyone that bought their shares at that point and held onto them until today will have generated incredible returns.
And while not all small cap shares will live up to their potential, there are a few that I feel have a good chance of doing so.
The three small ASX cap shares listed below are ones that I believe have enormous potential:
Audinate Group Limited (ASX: AD8)
The first small cap share to consider is Audinate. It is a digital audio-visual networking technologies provider which has delivered very strong sales growth in recent years. This is thanks to the increasing demand for its flagship Dante product. This award-winning audio over IP networking solution is being used widely across the professional live sound, commercial installation, broadcast, and recording industries globally.
Opthea Ltd (ASX: OPT)
Another small cap to consider is Opthea. It is a developer of novel biologic therapies for the treatment of eye diseases. I'm a big fan of Opthea due to the enormous potential of its OPT-302 combination therapy. This year the company's Phase 2b study delivered exceptional results. Given that the current standard of care treatments for wet age-related macular degeneration and diabetic macular edema had sales of over US$3.7 billion and US$6.2 billion in 2018, OPT-302 could be a real cash cow for the company if all goes to plan.
Serko Ltd (ASX: SKO)
A final small cap share to consider buying is Serko. It is a leading online travel booking and expense management provider. It has been an impressive performer over the last couple of years and has continued this positive form in FY 2020 with further strong revenue growth year to date. It also recently raised NZ$45 million to accelerate its growth. A cornerstone investor in this capital raising was travel booking giant Booking.com.
