If you’re looking for a little exposure to the small cap side of the market, then you’re in luck.
At present there are a good number of small cap shares that I believe have enormous potential.
While not all small caps will live up to their potential, three which I have a good chance of doing so are listed below. Here’s why I like them:
Nitro Software Ltd (ASX: NTO)
I think Nitro Software is a small cap worth keeping an eye on. It is a software company which provides document productivity solutions for businesses. At the last count, Nitro Software had over 10,982 business customers. These include 65% of the 2019 Fortune 500 and two of the 2019 Fortune 10. Increasing demand for its solutions led to the company reporting a 91% jump in subscription revenue to $13.2 million in FY 2019. This helped drive its annual recurring revenue (ARR) up 66% year on year to $16.9 million. Pleasingly, management appears confident that there is more strong growth to come in FY 2020.
Serko Ltd (ASX: SKO)
Around six weeks ago this fast-growing online travel booking and expense management provider’s shares were trading at an all-time high. But concerns over the impact of the coronavirus outbreak on the travel industry have sent its shares sinking lower. I think this could prove to be a buying opportunity for patient long-term focused investors. This is because of the growing popularity of its solutions in the travel industry and their large addressable markets. I expect this to lead to explosive recurring revenue growth once the travel and tourism market returns to normal.
Volpara Health Technologies Ltd (ASX: VHT)
A third small cap share to watch is Volpara. It is a fast-growing software-as-a-service medical technology company which has created artificial intelligence imaging algorithms to assist with the early detection of breast cancer. Volpara’s software continues to grow in popularity with radiologists across North America. This has led to strong market share gains and rapid recurring revenue growth. I expect this positive trend to continue this year and be supported by recent acquisitions.
Where to invest $1,000 right now
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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 Serko Ltd. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Nitro Software Limited 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.
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