Whilst some blue-chip shares like CSL Limited (ASX: CSL) deserve a place in most portfolios, I'm not sure traditionally popular blue-chips such as Woolworths Limited (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA) are as deserving of an investment right now.
With their earnings growth slowing, I believe investors would be better off skipping these shares and looking toward the small-cap side of the market instead.
Three small-caps which I think could score a touchdown for your portfolio this year are as follows:
Baby Bunting Group Ltd (ASX: BBN)
As the name implies, Baby Bunting is a baby products retailer. It had an incredibly strong FY 2016 resulting in a 55.8% jump in net profit after tax. Whilst I don't believe we will see such incredible growth this year, I still expect the company to deliver above-average profit growth in FY 2017. Especially as the first four months of the financial year saw comparable store sales growth of 10%. Its shares may be changing hands at 33x trailing earnings, but I believe its growth potential justifies the premium.
BWX Ltd (ASX: BWX)
BWX's Sukin skincare range recently launched in the United Kingdom through the Boots pharmacy chain. If the company can replicate its domestic success in the UK market then I believe BWX could have a bright future. Furthermore, the company has launched a Chinese language online store with the aim of boosting its sales into the massive China market. Like Baby Bunting, its shares don't come cheap at 32x trailing earnings. So investors may want to consider waiting until its half-year results are released on Thursday before making an investment.
Lifestyle Communities Limited (ASX: LIC)
I think Lifestyle Communities is a company that will be a big winner from Australia's ageing population. Through its 13 sites in Victoria it provides accommodation for working, semi-retired, and retired people over the age of 50. As well as its existing portfolio providing growth, the company plans to accelerate growth by completing at least one acquisition each year. I believe this could make it a great long-term buy and hold investment.
