At the small end of the Australian share market, I believe there are a good number of shares with the potential to grow into much larger entities in the future.
Three which I think ought to be on your watchlist right now are listed below. Here's why I think they have very promising futures:
Clover Corporation Limited (ASX: CLV)
The first small cap to watch is Clover. It is a producer of ingredients such as omega-3 oils that go into infant formula, supplements, and baby food. Clover has been growing at a strong rate over the last few years thanks largely to increasing demand for ingredients from infant formula manufacturers. Pleasingly, I'm confident that its strong growth can continue over the coming years. Especially given favourable changes to ingredient requirements in a number of key markets.
Mach7 Technologies Ltd (ASX: M7T)
Another small cap share to add to your watchlist is Mach7. It is a medical imaging data management solutions provider which offers software that helps inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. Demand for its offering has been growing strongly, leading to Mach7 reporting a 158% increase in first half revenue to $9.1 million. Since then the company has announced the acquisition of Client Outlook. It is a leading provider of an enterprise image viewing technology and increases Mach7's total addressable market from US$0.75 billion to US$2.75 billion.
MNF Group Ltd (ASX: MNF)
A final small cap to watch is MNF Group. It specialises in Voice over Internet Protocol (VoIP) technology, which is used to convert analogue audio signals into digital data that can be sent over the internet. Demand for VoIP services has been growing very strongly this year because of the pandemic and the work from home initiative. So much so, in April MNF Group was able to reaffirm its full-year guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) of between $36 million and $39 million.
