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3 small cap ASX shares that could be long-term market beaters

James Mickleboro
ASX Small Caps

Small cap shares are certainly higher on the risk scale than their large cap peers, but they also offer the potential for much bigger returns. This could make it worth including one or two of them in a balanced portfolio.

But which ones should you buy? Three small cap shares which I think have significant growth potential and could provide investors with market beating returns over the long term are listed below.

Here’s why I like them:

Alcidion Group Ltd (ASX: ALC)

I think this informatics solutions provider could be one to keep a close eye on. Alcidion is a provider of healthcare analytics software that is used by hospitals and healthcare providers. The software improves the efficacy and cost of delivering services to patients and reduces hospital-acquired complications. It has attracted attention from some highly regarded customers this year, including the Dartford and Gravesham National Health Service (NHS) Trust in the United Kingdom. Due to the shift to a paperless environment by the NHS and other healthcare organisations, I believe the company could experience strong demand for its software over the next decade.

Audinate Group Limited (ASX: AD8)

One of my favourite small cap shares is this digital audio-visual networking technologies provider. It has been an impressive performer over the last couple of years thanks to its award-winning Dante audio over IP networking solution. Dante is used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. Due to the product having a significant market opportunity and the company potentially launching a number of new products in the near term, I believe Audinate could continue growing its top line at a strong rate for many years to come.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health Technologies is a medical technology company which provides ground-breaking software that uses artificial intelligence imaging algorithms that assist with the early detection of breast cancer. In FY 2019 the company grew its annual recurring revenues materially thanks to strong demand and an expanding footprint. The good news is that this strong performance has continued in FY 2020. Last week the company revealed cash receipts of NZ$2.3 million in the first quarter, up 137% on the prior corresponding period.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended Alcidion Group Ltd and VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019