The top 10 ASX small-cap stocks to watch
Small-cap stocks give investors an excellent opportunity to diversify into assets with the potential for greater risk and reward. Here is a list of 10 of the ASX’s most promising small-cap stocks.
In any diversified investment portfolio, small-cap stocks can play an important role by creating opportunities for returns that are far higher than large-cap companies or blue-chip stocks.
'Small-cap' simply refers to those stocks with a smaller market capitalisation. In the Australian market, the S&P/ASX Small Ordinaries index (XSO) serves as the benchmark for small-cap Australian shares. Companies on the index generally have a market capitalisation of anywhere between several hundred million dollars to $2 billion.
By contrast, mid-cap stocks are defined as those ranging from $2 billion to $10 billion in size and large-cap stocks as those companies with a market capitalisation running between tens of billions to more than $100 billion.
As smaller, often recently launched companies, small-cap stocks present greater risk than larger companies because their business potential may not yet be realised.
This higher level of risk also brings the possibility for higher levels of reward. Small, fledgling companies have far greater potential for capital gains than large-scale companies that have already reached maturation.
Small-cap stocks also present Australian investors with a far wider range of companies from which to choose. Over 1,400 of the approximately 2,000 companies listed on the ASX have market capitalisations of less than $200 million, putting them squarely in small-cap territory.
For those investors looking to diversify their portfolios with higher-risk, higher-reward holdings, it is worth considering the following list of ten of the most promising small-cap ASX stocks for traders to buy.
4. Donaco International Limited
5. Paradigm Biopharmaceuticals
1. Cobre Limited: Market cap $38.7 million
Cobre Limited is a copper exploration growth company with prospective projects in both Western Australia and the African nation of Botswana.
Its flagship project is 8,100 square kilometres of tenements in Botswana's Kalahari Copper Belt – regarded as one of the world's most prospective areas for copper exploration.
In Western Australia, Cobre also has the Perrinvale Project in the Panhandle Greenstone Belt, which is rich in high-grade copper, gold, silver and zinc.
2. Oneview Healthcare: Market cap $64.86 million
Established in the Irish capital of Dublin in 2008, Oneview is a medtech company that specialises in the application of digital technology to the delivery of the healthcare experience to patients.
Key products include a range of digital devices such as tablets, touchscreens, patient doors and nurse stations that are designed to enhance the operation of healthcare facilities.
3. Cygnus Gold Limited: Market cap $48.57 million
Cygnus bills itself as a diversified critical minerals explorer with projects situated across a range of Tier 1 mining jurisdictions. These projects cover lithium, gold, nickel, copper and platinum deposits and are situated in the Canadian province of Quebec and Western Australia.
Cygnus’ flagship project is Pontax Lithium Project in Quebec which contains established deposits of high-grade lithium spodumene.
4. Donaco International Limited: Market cap $75.36 million
Donaco operates leisure and entetainment businesses in the Asia-Pacific that target the Chinese and Thai tourism markets. Key properties include the Star Vegas Resort & Club in Cambodia and the Aristo International Hotel in Vietnam.
Star Vegas was established in 1999 and is situated on Cambodia's border with Thailand, while Aristo is a five-star resort complex located in northern Vietnam on the border with China's Yunnan province.
5. Paradigm Biopharmaceuticals: Market cap $480.82 million
Headquartered in Melbourne, Victoria, Paradigm promotes itself as a commercially focused drug repurposing company that develops safe and effective treatments by identifying new uses for approved pharmaceuticals.
Its current commercial focus is the repurposing of Zilosul – a drug for the treatment of osteoarthritis in domestic pets, for the treatment of osteoarthritis in human patients. In August Paradigmed raised AU$66 million to fund initial trials.
6. XReality Group: Market cap $13.55 million
Headquartered in northern Sydney, xReality had its origins as an operator of indoor skydiving facilities but has since evolved into a developer of virtual reality and augmented reality technologies.7
Founded by two former SAS soldiers, xReality says that its products have applications for the enterprise, defence and consumer leisure markets.
In 2019 the company launched the consumer virtual reality brand FREAK Entertainment and in 2021 it acquired Red Cartel, marking its entry into the enterprise market.
7. Adore Beauty Group: Market cap $121.42 million
Adore Beauty claims to be the leading pureplay online beauty retailer in Australia, offering an integrated content, marketing and e-commerce retail platform for cosmetics products.
Kate Morris and Jame Height first founded the company in Melbourne in 2000 as one of Australia's earliest e-commerce sites. The company was listed on the ASX in 2020.
As an online retail platform, Adore has won a range of accolades and made the list of the Deloitte Tech Fast 50 and Asia Pacific Tech Fast 500 from 2013 to 2019.
8. Cettire Limited: Market cap $316.43 million
E-commerce fashion retailer Cettire says it makes high-end luxury brands such as Prada and Gucci more accessible to customers via its online platform, an easy-to-use payment system and free express shipping.
Founded in Melbourne in 2017, Cettire emerged from tech incubator Ark Technologies and was listed on the ASX in December 2020 with a valuation of $190 million.
9. Titomic Limited: Market cap $45.2 million
3D printing company Titomic specialises in additive manufacturing of metal parts for the aerospace, automotive, defence and mining sectors.
It claims to integrate proprietary cold spray technology and turnkey systems into the existing machinery of customers to achieve process improvements.
According to Titomic, these improvements enable customers to improve products and raise productivity and profitability levels.
Headquartered in Melbourne, the company also has offices in India, Turkey, the Netherlands and the US.
10. LiveTiles Limited: Market cap $60.92 million
Software developer LiveTiles bills itself as a pioneer in the Employee Experience Platform space, producing cloud-based digital workplace solutions for enterprises.
The company launched in 2014 and listed on the ASX just a year subsequently in late 2015. LiveTiles claims to have more than 1,100 enterprise clients in the USA, Europe and the Asia-Pacific.
Headquartered in Melbourne, LiveTiles also has offices in New York, Basel, Zurich, Sydney, Brisbane and Hobart.
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