One thing that Australian investors are not short of in my opinion is quality options in the small cap space.
I think at the small end of the market there are a good number of shares with bucketloads of growth potential.
Three that I think investors should be keeping a close eye on are listed below. Here's why I like them:
Bubs Australia Ltd (ASX: BUB)
This goat milk infant formula and baby food company is aiming to be the next A2 Milk Company Ltd (ASX: A2M) or Bellamy's Australia Ltd (ASX: BAL). While I have found its sales growth thus far to be underwhelming, it is early days and Bubs has recently signed numerous distribution agreements that will significantly expand its footprint in China. I'm holding off investing until I've seen proof that there is demand for its products in the lucrative market.
ELMO Software Ltd (ASX: ELO)
One of my favourite shares at the small end of the market is this cloud-based talent management software solutions provider. ELMO has been experiencing strong demand for its services over the last 12 months, meaning it is on course to achieve total revenue of $31.2 million and EBITDA of $5.7 million in FY 2018. This is significantly higher year-on-year and well above its prospectus forecasts. As well as this, a recent $46 million capital raising gives ELMO a strong cash balance and the flexibility to make earnings accretive acquisitions in the future.
Livetiles Ltd (ASX: LVT)
LiveTiles is a fast-growing digital workplace platform provider which is targeting a leadership position in the massive artificial intelligence market. The company has made big strides towards achieving this goal in recent months through the signing of AI-related deals with tech giant Microsoft and the Clean Energy Smart Manufacturing Innovation Institute. It is still early days, though, and there's a long road ahead.
