If your risk profile allows it, I think having a little exposure to small cap shares can be a good thing for a portfolio.
You only need to look at the outperformance of the Small Ordinaries over the last three years to see how small cap shares could have boosted your portfolio.
During this time the small cap index has put on a gain of over 30% compared to a gain of 17% by the benchmark ASX 200.
With that in mind, here are four small cap shares that I think are well worth keeping an eye on:
Audinate Group Limited (ASX: AD8)
Audinate is digital audio company that develops hardware and software solutions for the professional audio-visual industry. Last year the company grew its full year revenue by 30% to $19.7 million. Pleasingly, Audinate has built on this in FY 2019 and recently reported a 51% increase in first quarter cash collections to $6.8 million.
Citadel Group Ltd (ASX: CGL)
Citadel is a leading software and services company specialising in information management. Its key product is its Citadel-IX cloud-based enterprise information management platform which allows users to securely access and transfer proprietary and sensitive information remotely. It counts many government agencies as customers, which I believe is a testament to the quality of the product.
ELMO Software Ltd (ASX: ELO)
ELMO Software is a leading provider of cloud-based human resources and payroll software solutions. Like Audinate, it has had a strong start to FY 2019. It recently reported a 91% increase in quarterly cash receipts on the prior corresponding period to $10.3 million. Due to its large market opportunity and high quality product offering, I expect similarly strong growth over the course of the year.
Megaport Ltd (ASX: MP1)
I think that this leading provider of elastic interconnection services in data centres across the world could be a great way to gain exposure to the cloud computing boom. Its growing footprint and increasing demand for its services led to Megaport achieving an 85% increase in revenue in FY 2018. A recent update revealed that Megaport has had a strong start to FY 2019 thanks to further increases in its footprint, customer numbers, and total ports.
