Although the Australian share market has enjoyed a nice run since the start of the new financial year, the S&P/ASX 100 (Index: ^AXTO) (ASX:XTO) has still managed to post a loss of more than 5% over the past 12 months.
Unlike their larger counterparts, however, smaller companies on average have performed far better over the past 12 months and this is highlighted in the comparative chart below.
While there is the possibility that some of the under-performing blue-chip shares like Woolworths Limited (ASX: WOW) and BHP Billiton Limited (ASX: BHP) could rebound in the short term, I believe investors looking for fast growing companies should focus their attention on the smaller end of the market.
Here are three small-cap shares investors could consider at the right price:
Vitaco Holdings Ltd (ASX: VIT)
Shares of the vitamin and health food company have tumbled by more than 38% since the start of the year, despite the company re-affirming its full year profit guidance on several occasions. It appears the market was expecting more from Vitaco, especially with some investors comparing the company to Blackmores Limited (ASX: BKL).
The shares are now trading at an attractive valuation for a company that is still expected to deliver reasonably strong growth, although I expect investors to maintain a 'wait and see' approach until the company reports its full year results next month.
Webjet Limited (ASX: WEB)
The online travel agent has enjoyed a stellar 24 months thanks to strong organic growth combined with a number of smart acquisitions. Although the Australian business still makes the largest contribution to the company's overall earnings, it is the international division that is beginning to show much stronger growth.
Despite its impressive run over the last two years, the company still has a market capitalisation of just $700 million and this makes me think the company has the potential to grow into a much larger player in the sector. With that in mind, the shares appear fully valued at current prices but a move down on a market wide sell-off could present an excellent buying opportunity.
Nanosonics Ltd (ASX: NAN)
Nanosonics is an infection control company that is trying to develop a portfolio of disinfection and sterilisation solutions aimed directly at the healthcare market.
The company is already enjoying great success with its first product which is being used to disinfect ultrasound probes. This was highlighted in Nanosonic's more recent quarterly cash flow statement that showed record sales, positive cash flow and a rising cash balance to $44.2 million.
Importantly, Nanosonic's potential target market is huge and is growing larger as hospitals and clinics around the world become more concerned about the potential of pathogens becoming resistant to traditional disinfectants. This, however, appears to have already been priced into the company's $710 million valuation and investors might want to wait for a pullback before buying the shares.
