Hidden gems: These microsectors on the ASX have gained the most in 2019
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This year has been a positive one for ASX small caps. According to Bloomberg, the average small cap has gained just under 5 per cent and some of the major sectors have seen double digit percentage gains.
One example is the health sector which has gained 20 per cent with success stories like pain-detecting app PainChek (ASX:PCK); and macular degeneration fighter Opthea (ASX:OPT). But if you divide small caps even further there are gains to be had.
Utilising a division method known as the GICS code, which classifies companies based on their sector, Stockhead has identified five micro-sectors of the ASX that have performed well in 2019.
This sector is home to three small caps which have more than tripled in 2019, led by PainChek (ASX:PCK) as well as health informatics stock Alcidion Group (ASX:ALC) which is up 470 per cent and Mach7 Technologies (ASX:M7T).
The catalyst for PainChek was receiving funding from the Morrison government, which set off a chain reaction of new clients coming onboard.
This sector includes potash, hydrogen and industrial sanitisers. Leading this sector is Advance Nanotek (ASX:ANO) which is up 567 per cent since January 1. Among this company’s chemicals are a zinc-oxide based UV absorber (ZinClear) and an aluminium oxide pigment (Alusion).
But hydrogen has been a stand out as well with Hazer Group (ASX:HZR) gaining 61 per cent as it strives to become Australia’s first company to produce pure hydrogen for energy consumption.
When it comes to life sciences it is easy to think of companies such as Opthea (ASX:OPT) that are testing drugs to cure diseases. But a handful of stocks on the ASX use physical devices. One example is Memphasys (ASX:MEM) which has developed a sperm sorting device to be an alternative to IVF treatment and it has gained 523 per cent in 2019.
Another gainer is Genetic Signatures (ASX:GSS) which has a technology that screens for infectious pathogens — it’s up 89 per cent this year.
This is the same sector that in the US contains Facebook and Alphabet (GICS Code: 502030). This category was only created last year as part of a reshuffle of the codes — last done in 1999 when the latter was just another search box and the former didn’t exist.
Down Under, this sector has been led by the high-flying Tinybeans (ASX:TNY) which has improved its revenues signing clients such as Lego. Next is adtech company Advertisas (ASX:AV1) which has gained 278 per cent in 2019.
In recent months tech privacy has been a concern but evidently investors have been able to shrug this off — Stockhead had a fascinating chat with CEO Eddie Geller about this issue.
This sector is well and truly a micro sector made up of just six companies. Up 112 per cent in 2019 is DroneShield (ASX:DRO) which is capitalising on the explosion in popularity of drones. But it doesn’t make drones, it intercepts and scrambles them.
Also doubling this year is Canberra-based XTEK (ASX:XTE) which has a processing technology that allows it to make things lighter and stronger. This company began servicing clients in the military, specifically ballistics protection, but it is expanding into the space industry due to a demand. Sending anything into space is not cheap, and the lighter something is, the easier and less costly it will be to launch.