With traditionally popular blue-chip shares such as Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) offering little by way of growth at the moment, I believe investors' portfolios could be better served with a little exposure to the small-cap space.
Three small-caps that I believe could provide investors with market-beating returns over the next few years are as follows:
Adacel Technologies Limited (ASX: ADA)
Adacel provides aviation and flight simulation technologies for both the civil and defence industries. Although the company operates in 38 countries, the biggest attraction in my opinion is its foothold in the massive U.S. aviation market. In the U.S. it has a 90% share of the air traffic control simulator market, with an installed base of 341 training simulators. The company may have grown strongly in the last few years, but I believe there is still significant growth ahead thanks to opportunities in the U.S. civil market.
Appen Ltd (ASX: APX)
This leading provider of high-quality language data and services to major technology companies, automakers, and government agencies would have to be one of my favourite tech shares on the ASX. Any tech company that can call Microsoft and Facebook customers is clearly doing something right. For Appen, its strength is its ability to adapt a customer's product and/or service appropriately to set it up for success in global markets. Although its share price has doubled in value in the last 12 months, I still believe it isn't too late to pick up shares.
MNF Group Ltd (ASX: MNF)
MNF Group is a founder-led provider of voice-based internet communications with lofty ambitions to become a leading global provider of wholesale voice minutes. In FY 2016 the company reported record full year EBITDA of $17.8 million, which was up an impressive 46% on last year. Management expects FY 2017 to be another year of solid organic growth, bolstered by potential earnings accretive acquisitions. I think MNF Group could prove to be a great buy and hold investment.
