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These exciting small cap ASX shares could be destined for big things

If you’re looking for strong returns in 2020, then I think a little exposure to the small cap side of the market could be a good thing.

At this side of the market there are a number of companies that have the potential to grow materially over the next decade.

Whilst not all small cap shares will live up to their potential, I feel the three listed below have a good chance of doing so. Here’s why I like them:

ELMO Software Ltd (ASX: ELO)

ELMO Software is a provider of cloud-based human resources and payroll software. Its increasingly popular unified platform allows users to streamline processes for everything from employee administration, recruitment, and payroll. It has been a strong performer over the last couple of years and I remain confident it is well-placed to continue this positive form in FY 2020 and beyond. For example, at the end of the first half its annualised recurring revenue (ARR) reached $52 million. This was up a sizeable 42.8% on the prior corresponding period. Another positive is that the company now has an office in the UK following an acquisition. This, combined with its jurisdiction agnostic platform, could provide it with an opportunity to expand into this lucrative market in the future.

LiveTiles Ltd (ASX: LVT)

LiveTiles is a provider of engaging intranet portals and collaborative online working environments for businesses. Whilst it has underwhelmed in recent quarters, I believe it still has a bright future ahead of it. Especially after it was approved as a vendor with the US Government and the US Department of Defense. The US Federal Government is projected to spend over $127 billion on IT products and services in 2020. In addition to this, the company’s close ties with Microsoft and its engagement of a dedicated salesforce should be supportive of its growth in the coming years.

Mach7 Technologies Ltd (ASX: M7T).

Mach7 is a medical imaging data management solutions provider for healthcare organisations. Its solutions create a clear and complete view of the patient to inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. Demand for its offering has been growing strongly, leading to the company reporting a massive jump in half year revenue and profits last week. Pleasingly, management appears confident the company can build on this success in the second half and beyond.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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 and recommends Elmo Software. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MACH7 FPO. The Motley Fool Australia has recommended Elmo Software and LIVETILES FPO. 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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