I think that having a little exposure to the small cap side of the market can be a good thing for a portfolio.
After all, if you unearth the next Afterpay Ltd (ASX: APT) when it is just starting out, you could generate significant returns.
With that in mind, I have picked out three small cap ASX tech shares which I think could be worth a closer look. They are as follows:
Audinate Group Limited (ASX: AD8)
Audinate is a digital audio-visual networking technologies provider. It was growing at a rapid rate prior to the pandemic thanks to the significant expansion of its Dante product offering and the increased adoption by Original Equipment Manufacturers. While the pandemic will put a dampener on its growth, given the benefits it offers end users, I expect demand to pick up once the crisis passes. In addition to this, the company has recently expanded its offering into the audio-video category and could soon revolutionise this market.
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 growing very strongly in the ANZ market and delivered a 42.8% increase in annualised recurring revenue (ARR) to $52 million during the first half. The good news is that the company has still only captured a small slice of the local market. I believe this provides it with a long runway for growth. In addition to this, as its platform is jurisdiction agnostic, I believe an international expansion is a real possibility in the future.
Serko Ltd (ASX: SKO)
Serko is a technology company with a focus on developing innovative solutions to address the challenges of corporate travel and expense management. It is a market leader in its category and has over 6,000 corporations and travel management companies using its platform. While Serko’s business has been negatively impacted by the pandemic, it is well-funded and appears to be positioned for a return to growth when travel markets normalise.
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 Serko Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and Elmo Software. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 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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