I think having a little exposure to the small side of the market can be a good thing for a portfolio.
Especially if you can catch a future mid or large cap share in the early stages of its development.
For example, the likes of Afterpay Ltd (ASX: APT) and Ramsay Health Care Limited (ASX: RHC) were small cap shares at one stage. Now they are $10 billion and $16 billion giants, respectively.
Not all small cap shares will live up to their potential, but two which I think have a good chance of doing so are listed below. Here's why I think they are worth watching closely:
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is a provider of enterprise mobility software that allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction. It has been attracting a large number of blue chip clients to its platform over the last 12 months such as Nike and Sephora.
As a result of this, its annualised recurring revenues (ARR) have been growing at a rapid rate. At the end of the second quarter its ARR had reached $32.4 million, which was a 55% increase on the same time last year. This puts the company on track to achieve its guidance of 30% to 40% organic revenue growth in FY 2020.
Straker Translations Ltd (ASX: STG)
Straker Translations is a leading translation platform provider. It uses a combination of artificial intelligence and crowd-sourced human intelligence to provide language translation services at scale.
The company has been on a bit of an acquisition spree over the last 12 months. It has been adding complementary businesses that expand both its product offering and its global footprint. I believe this leaves Straker well-positioned to continue its positive form and achieve further strong growth over the next decade.
