I think the Australian share market is home to a large number of small cap shares that have the potential to grow materially larger in the future.
While history shows that not all small caps 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 watch in 2020:
Alcidion Group Ltd (ASX: ALC)
Alcidion is an informatics solutions company. It provides software which aims to improve the efficacy and cost of delivering services to patients and reduce hospital-acquired complications. I feel it is well placed for growth 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. It has been growing at a rapid rate thanks to the significant expansion of its Dante product offering and the increased adoption by Original Equipment Manufacturers (OEMs). Due to the quality of the Dante product, I expect its strong growth to continue in FY 2020 and beyond.
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is a provider of enterprise mobility software that allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction. This is achieved through improved mobile worker productivity. It recently announced agreements with sports giant Nike and beauty retailer Sephora. I feel this bodes well for its performance in FY 2020.
Dubber Corp Ltd (ASX: DUB)
Dubber is an Australian software company that develops cloud-based communication technologies. These technologies allow businesses and corporate clients to record, manage and analyse phone calls and communications. In FY 2019 its revenues more than doubled to $7.4 million thanks to a massive increase in active customers.
LiveTiles Ltd (ASX: LVT)
Although I’ve been a little disappointed with its performance in 2019, I still feel LiveTiles is worth watching closely. It 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.
Opthea Ltd (ASX: OPT)
Opthea is a developer of novel biologic therapies for the treatment of eye diseases. Earlier this year the Phase 2b study of its OPT-302 combination therapy delivered exceptional results. If its phase 3 results are equally successful, OPT-302 could be a major cash cow. 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.
Paradigm Biopharmaceuticals Ltd (ASX: PAR)
Another growing biotech company is Paradigm. It is repurposing Pentosan Polysulfate Sodium (PPS) to treat osteoarthritis. The trial results of the drug, ZILOSUL, have been very promising. This is a big positive given its massive market opportunity. Management notes that there are over 31 million osteoarthritis sufferers in the United States alone.
Serko Ltd (ASX: SKO)
Serko is an online travel booking and expense management provider. It has been growing at a very strong rate over the last couple of years and looks well-positioned to build on this in FY 2020. Especially given its strong cash balance, sizeable market opportunity, and growing recurring revenues.
Straker Translations Ltd (ASX: STG)
Straker Translations is a translation services platform provider. It uses a combination of artificial intelligence and crowd-sourced human intelligence to provide 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 in FY 2019.
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 and lung cancer. Thanks to the growing popularity of its software with radiologists across North America, Volpara has been growing its recurring revenues at a rapid rate. I expect this positive form to continue this year, especially with the help of recent acquisitions.
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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, AUDINATEGL FPO, BIGTINCAN FPO, Serko Ltd, and VOLPARA FPO NZ. The Motley Fool Australia has recommended Alcidion Group Ltd, AUDINATEGL FPO, BIGTINCAN FPO, LIVETILES FPO, Serko Ltd, Straker Translations, 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.