One of the best ways to generate significant wealth in the share market is by identifying small cap shares that have the potential to grow into large caps in the future.
A prime example of this is private hospital operator Ramsay Health Care Limited (ASX: RHC).
Back in 2000 the company was a small cap that you could've picked up for approximately 80 cents per share.
Fast-forward to today and it is one of the biggest private hospital operators in the world with a market capitalisation of $14.6 billion.
Its shares also recently reached an all-time high of $73.30, which means that investors would have earned 91.6x their money (excluding dividends) if they bought in at 80 cents and held on.
Based on this return, a $10,000 investment would now be worth $916,000. And if you include the many dividends it has paid over the period, I feel it is safe to say that the return would have broken through the million-dollar mark.
While it's obvious that not every small cap share will be as successful as Ramsay Health Care, I think there are a number of shares on the local market that have the potential to generate outsized returns over the long term.
Three that I think investors should watch closely are as follows:
LiveTiles Ltd (ASX: LVT)
LiveTiles is a digital workplace platform provider which allows its users to create dashboards, employee portals, and corporate intranets that can then be enhanced with artificial intelligence and analytics features.
Straker Translations (ASX: STG)
Straker Translations is a translation services platform provider which uses a combination of artificial intelligence and human intelligence to provide efficient language translation services at scale.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara Health Technologies is a medical technology company which provides software that uses artificial intelligence imaging algorithms that assist with the early detection of breast cancer.
