- Small-cap stocks have historically outperformed large-cap stocks.
- But investors must be careful while picking up these stocks owing to their volatile nature.
- Whispir and Alcidion are a few small-cap stocks to consider.
Small-cap stocks belong to companies that have a low market capitalisation (m-cap). A small-cap is a company with a m-cap between AU$50 and AU$500 million.
Small-cap stocks have historically outperformed large-cap stocks. However, these carry higher risks compared to large-caps and mid-cap stocks. Thus, investors must be careful while picking up these stocks owing to their volatile nature.
Here, we will discuss three small-cap stocks for investors in 2021:
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Whispir Ltd (ASX:WSP)
The small-cap tech share Whispir is a software-as-a-service communications workflow platform provider. The stock has performed on a strong note in the past few years, including 2021. In the last one year, the stock gave a return of just over 32%.
The AU$332.02 million company’s annualised recurring revenue (ARR) was up 20.3% over the prior corresponding period to AU$50.3 million in the third quarter of FY2021. The robust performance was on account of the continued rise in number of customers and accelerated usage of its services.
However, it was still slightly short of its total addressable market (TAM) opportunity. The company’s management projects that it has a TAM of US$4.7 billion in just US.
Whispir recently raised capital raising significant capital and is expected to execute its growth strategy and capture a sizeable share of the growing market.
On 18 June 2021, the stock closed 2.90% higher at AU$2.84, compared to the previous closing on 17 June 2021.
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Alcidion Group Ltd (ASX:ALC)
Alcidion provides software to improve the efficacy and cost of delivering services to patients and reduce hospital-acquired complications. The company is expected to grow in the coming years amid the transition to a paperless environment in the healthcare sector.
In its March quarterly update, the AU$461.15 million company said that it added AU$4.8 million of contracted revenue in the third quarter, of which AU$3 million would be recognised in FY21. The net operating cash flow stood at AU$2.8M for Q3 FY21, and contracted revenue of AU$24.7M expected would be recognised in FY21.
The company expects the acquired ExtraMed business to contribute nearly AU$2.7 million in FY22 revenue and AU$0.5 million earnings before interest, tax, depreciation, and amortisation (EBITDA) from its existing contracts.
On 18 June 2021, the stock closed 6.02% higher at AU$0.44, compared to the previous closing on 17 June 2021. In the last one year, the stock gave a return of just over 159%.
Booktopia Group Ltd (ASX:BKG)
The online book retailer has performed well in the past one year due to the shift to online shopping. In the first half of FY2021, Booktopia delivered a record 4.2 million shipments, up 40% over the previous corresponding period.
In the same period, the company reported a 51.1% jump in revenue to AU$112.6 million and a 502.3% rise in underlying EBITDA to AU$8 million. The company also posted strong growth in the third quarter.
On 18 June 2021, the stock closed 0.76% lower at AU$2.60, compared to the previous closing on 17 June 2021. In the last one year, the stock gave a negative return of nearly 5%.