The small cap side of the market is certainly higher up the risk scale. But I believe a little exposure to it can be a good thing for a portfolio, if your risk profile allows for it.
After all, if you can identify the next Appen Ltd (ASX: APX) or Ramsay Health Care Limited (ASX: RHC) while they're still small, you could generate incredible returns in the future.
With that in mind, I have picked out three small cap ASX shares which I think would be worth watching closely:
Audinate Group Limited (ASX: AD8)
Audinate is a digital audio-visual networking technologies provider. It has achieved very strong sales growth in recent years thanks to the increasing demand for its Dante product. This award-winning audio over IP networking solution is being used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. And while demand has fallen materially during the pandemic, I expect it to rebound strongly once the crisis passes.
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is a provider of enterprise mobility software. Its platform allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction. This is achieved through improved mobile worker productivity. I believe a testament to the quality of its platform is its blue chip customer base. It counts the likes of sports giant Nike, beauty retailer Sephora, drinks company Red Bull, and one of the big four banks as customers.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara Health Technologies is a provider of software that uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been growing at an explosive rate over the last few years thanks to the increasing popularity of its software with radiologists across North America. Thanks to the quality of its software and recent acquisitions, I believe it is well-placed to continue this strong form in FY 2021 and beyond.
