Picking the winners in the small caps market can be tough, but you could do worse than look at these three sectors for growth.

Plenty of companies on the market offer promise, but don’t offer the potential to become the multi-baggers small cap investors hope for when they pile their money into the smaller end of the market.

READ: 6 reasons to invest in small cap stocks

Sometimes, it’s just a matter of good timing and luck.

For example, if you invested in miners Northern Star Resources (ASX:NST) you would have waited a while for its growth curve to play out.

It went from 2 cents to a whopping $9.34, but it took 10 years to get there.

But for those looking for bigger gains in a shorter time-frame, Star Investing has identified the top 15 risers this year (at the time of writing) — and found they come from three core sectors.

Health and tech 

These tech and health care stocks have found increased customer numbers, proof their product works or both.

They also have commercial partners to make their plans a reality.

The biggest gaining stock, Avita Medical (ASX: AVH), is one of several stem cell plays on the ASX. Companies such as Avita uses stem cell therapy to treat various ailments from diabetes to arthritis. Avita’s target is burn injuries and wound care.

READ: How stem cell therapies are dividing and conquering

This year Avita has continued to have its product validated by research and have began to distribute its products, particularly in Japan through local partner, COSMOTEC as well as in America. As a result it’s up nearly 500 per cent this year.

In stark contrast, fellow wound-care stock Factor Therapeutics (ASX: FTT) collapsed last year after it found its methods did not work.

Another riser was, Orthocell (ASX: OCC) which spiked after a positive Phase II clinical trial result for its collagen scaffold technology. Essentially it helped the majority of patients with damaged nerves regain sensation.

Another gainer was family app Tinybeans (ASX: TNY). After several months of losing money, it’s approaching break-even point as it announced marketing deals with Lego and an unnamed US life insurer.

Mining

All 700 mining stocks on the ASX are hoping to come across the next big deposit that will send their competitors, offtake partners and potential acquirers flocking to their door step.

It’s fair to say only the big mining companies (such as BHP, Fortescue and Rio Tinto) are in that position.

But the miners on this list look like they are well on their way.

Lithium miner Liontown Resources (ASX: LTR) have recorded outstanding drilling results at its West Australian lithium project. West Australian gold miner Spectrum Metals (ASX: SPX) has had success as well.

Sometimes, mere hype can be enough to send a stock up.

Chile-focused miner Hot Chili (ASX: HCH) began the year signing an MOU to potentially acquire a copper-gold discovery that is historically significant.

It took up the right and has been drilling since. While no results had been announced, investors have clearly been excited about the project.

Code Name Price

(20th May)

Total Return YTD (%) Market Cap
AVH AVITA MEDICAL LTD 0.49 493 $913.6M
R3D R3D GLOBAL LTD 0.04 471 $1.6M
ANO ADVANCE NANOTEK LTD 3.7 445 $273.2M
8CO 8COMMON LTD 0.165 429 $24.1M
ATU ATRUM COAL LTD 0.345 324 $164.0M
TNY TINYBEANS GROUP PTY LTD 1.4 322 $46.3M
LTR LIONTOWN RESOURCES LTD 0.084 295 $128.4M
WZR WISR LTD 0.14 293 $108.9M
OCC ORTHOCELL LTD 0.49 286 $60.3M
HCH HOT CHILI LTD 0.032 282 $35.6M
SPX SPECTRUM METALS LTD 0.019 280 $24.0M
FTC FINTECH CHAIN LTD 0.18 275 $117.1M
FEX FENIX RESOURCES LTD 0.82 270 $20.1M
AIR ASTIVITA LTD 0.24 269 $12.9M
ISX ISIGNTHIS LTD 0.56 255 $600.6M

 

This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.