ASX Shares to Buy: a Growth Small Cap

Caroline Mark

I'm buying ASX Shares, normally one or two ASX small caps using the money I've saved in a month. Today I'm buying an ASX Share that is small cap in the medical technology space. This Small Cap ASX share has lots of potential and is much more than a penny stock.

ASX Shares To Buy

As you know I'm buying ASX shares, normally one or two ASX small caps, using the money I've saved in a month. 

An image of a doctor on a computer

The next ASX Small Cap I'm buying: Disruptive ASX Small caps

I've chosen the next small cap share I'm buying. I'm buying small caps that I am genuinely interested in, that the business really has something to offer, that it is in a niche. We have been doing a cool three part series on small cap disruptive stocks.  I'll talk about disruptive stocks a bit more later, but right now I want to get into the ASX small cap share I'm buying!

I just hit buy on ASX Small Cap: Volpara (VHT)

This ASX small cap has some great new game changing techonology to transform the early detection of breast cancer in the giant US market. I don't know about you, but I know not just one friend who has had breast cancer. In fact it's one in eight women world wide who are diagnosed. And any help in early detection would help save lives. An estimated whopping 75million women are screened each year in a 'one size fits all' approach. But Volpara makes software that impoves the quality of the screening which helps detect breast cancer early. It then helps in practice management that is used by clinics for patient analytics, tracking and reporting.

But this isn't just an emotional decision. Even thought Volpara is in the early stages of it's life cycle it's showing strong growth and it is actually making money (lots of med techs don't or aren't). So although it's small and young, it's showing strong signs that it can make it and the company says it is on track to meet FY20 sales guidance of NZ$17.1m. It's got cash in the bank, and no debt. 

Speculative Buy and risk in ASX Share Investing: Is it gambling?

A friend of mine refuses to invest in the share market because she thinks it's gambling. When you gamble it's all or nothing.

I know that I'm putting $1,000 into a little company but it's financial numbers and the science behind it's technology show strong signs that it will make it past the post. 

We have a Speculative Buy on this small cap, which means that it is more risky than other ASX stocks. The bear points are that there is slow product uptake, competition, cash burn and integration risk, but I think the bull points outweigh this. There are high barriers to entry, there is strong intellectual property (it was founded by imaging specialists from Oxford University, the Netherlands and Canada), clearly it's a global disease and there are high barriers to entry. Also the financial numbers look promising.

Diversification is essential with an ASX Share portfolio

I'm not going to put lots of money into this small cap, but I like it enough to put a little bit in it. If I was just buying one ASX share would Volpara be it? I doubt it, but with a growing diversified portfolio of ASX shares I like the promise of this small cap.

To balance out my small caps I'm looking at buying a Blue Chip ASX Share next. This week we have put out our latest Blue Chip Value report and the performance of our ASX Blue Chip portfolio is excellent and it's outpeforming the ASX 200. 

An image of the outperformance table

Share Investing does take time

I'm a bit flat out at the moment and I don't have time to sit down and think about my next share to buy. I am going to buy a share that balances out my more risky stocks that I've just bought and so I'm going to buy a Blue Chip share using today's Under the Radar ASX Blue Chip share report using our price targets. (It worked last time so  I'm going to give it another shot).

We also have some good commentary on what dropping interest rates mean for the top ASX 200 shares and which shares will benefit from quantitative easing. (which just means when the government buys back its own bonds of other assets, effectively printing money - which was happening in the US). But I'll talk more about that next week when I buy my next ASX Blue Chip Share.

Back to Small Caps and what do we mean by disruptive ASX stocks?

Disruptive businesses are the small cap trouble makers for the old guard. These small caps take existing demand and introduce a new business model that undercuts the established competitors, effectively taking their profits away from them. A good example at the big end of town was where Seek and fellow e-tailer realestate.com.au owner REA Group disrupted the media business. Both don’t have to fund lots of journalists and newspaper printing distribution plant and equipment, like Fairfax does, or did.

Either way, the super profits disruptive business models can make are enough to satisfy any investor hungry for returns. If you were lucky enough to get stock in the Seek float, you would be making over 8 times your initial investment based on its current price. In contrast your investment in Fairfax would be down about 70%.

ASX Small Caps that are successful dirsruptors

Under the Radar has had success in the disruptor category, with some of our small caps having climbed an average of 8-fold since we tipped them.

Clean Energy ASX Small Cap Disruptor Stock

This week we started covered on another new ASX small cap stock that turns human waste into clean energy which could disrupt conventional producers of hyrogen and graphite miners. It has fascinating technology but it is too risky for me and I'm not investing in it and I'm happy with Volpara.

ASX Small Caps: Dividend Portfolio

Over 50% of the ASX Small Caps we cover pay dividends. In a few weeks we are going to put out another portfolio of ASX Dividend paying small caps. We have a good track record from these portfolios so that is one to watch coming up. I'll be keeping on saving my pennies to invest more into the share market, gambling or not.


 

About the Author

Caroline Mark

Caroline Mark is the Founder and Publisher at Under the Radar Report, which provides independent ASX share research to help build investor’s share portfolio. Under the Radar Report is licensed to give general share financial advice only (ASFL: 409518). The author is not licensed to give personal financial advice and this commentary is for general information only.

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