Telecommunication giant TPG Telecom Ltd (ASX: TPM) wasn't always a blue-chip share. In fact, just 10 years ago the whole company had a market value of just $238 million. That's a far cry from the $11 billion market capitalisation it had last year prior to the sell-off in its shares.
Lucky investors which have held its shares for 10 years have seen an average annual return of 29%, even after accounting for the halving of its share price in the last six months. This means a $10,000 investment in TPG Telecom would be worth almost $130,000 today.
I believe this demonstrates the power of buy-and-hold investing and the potential reward investors can receive if they find a future blue-chip share when it is still a fledgling small-cap.
Whilst achieving this level of return might be wishful thinking, here are five promising small-caps which I think are worth adding to your watch list today:
Afterpay Holdings Ltd (ASX: AFY)
This payments company currently provides 2,100 retailers with the ability to offer an interest-free buy now, pay later service online and in-store. Afterpay bears the default risk in exchange for a small commission on the transaction. Two weeks ago the company reported that it processed over $100 million in underlying sales during the December quarter. This was a massive 146% increase on the prior quarter. Afterpay is definitely a company to keep a close eye on in my opinion.
Bionomics Ltd (ASX: BNO)
Although this biopharmaceutical company had a couple of disappointing years with little progress being made it appears to be on the right path now. So much so I believe Bionomics' development pipeline has the potential to transform it into a much bigger player in the industry. The company's anxiety drug BNC210 has shown a lot of promise in recent trials. With the market expected to be worth up to US$18 billion a year by 2020, Bionomics could be positioned for explosive long-term growth.
Collins Foods Ltd (ASX: CKF)
Collins Food operates KFC restaurants in Queensland, Western Australia, and the Northern Territory. Whilst its domestic operations are reasonably strong, the big attraction in my opinion is its European expansion. Last year the company acquired 11 KFC restaurants in Germany. As KFC Germany plans to rapidly expand its store network, I believe Collins Food has arrived in the country at an opportune time.
Eden Innovations Ltd (ASX: EDE)
This clean energy company could have an extremely bright future thanks to its EdenCrete carbon nanotube enriched liquid concrete admixture. Trials in the United States have shown that EdenCrete 'enriched concrete' on a busy highway vastly outperformed regular concrete mix. Trials are now underway to test its use for applications including ready mix concrete, low shrinkage concrete for dams, and pre-cast applications.
Medical Developments International Ltd (ASX: MVP)
MDI is the company behind the Penthrox pain management product also known as the green whistle. Last year the company expanded its international presence significantly by gaining approval for its sale in countless countries across the world. Never one to rest on its laurels, the company has recently commenced with a clinical program to expand its use into minor surgical procedures. Management estimates this market to be worth around $2 billion a year.
