Written by Ron Shamgar

In every cycle, there are companies that make a lot of noise and companies that quietly get on with the job. The first group tends to attract the headlines. The second group tends to generate the returns. The current market, with its shifting macro signals and sharp swings in investor sentiment, has created an environment where real operational excellence is easy to overlook in favour of whatever story happens to dominate the day.

Yet it is precisely during these periods that long term investors should be paying attention to businesses that are improving their earnings quality, strengthening their competitive positions, and gaining momentum in their industries. Today we highlight three such companies. Each is executing well. Each has multi year growth drivers. Each trades on valuations that remain attractive relative to the scale of their opportunity. And importantly, each represents a different kind of structural change taking place across the Australian small cap landscape.

Edu Holdings, Credit Clear, and Austco Healthcare operate in entirely different industries. However, they share similar characteristics. They are disciplined operators. They benefit from sectors undergoing meaningful shifts. They are run by management teams with clear strategies. And they are building earnings streams that have the potential to look materially higher in the next two to three years. These are the types of companies that reward patient investors.

Let us walk through each business and explore why their trajectories matter and what makes them worth following closely.

Edu Holdings, A Regulatory Reset Meets Genuine Operating Momentum

There are times in investing when good operational execution coincides with positive structural change. Edu Holdings (ASX: EDU) is one of those examples. The company has delivered consistently strong performance across both of its key education divisions, Ikon and ALG. This is impressive on its own, but the more interesting story is the broader industry backdrop.

At Ikon, total student enrolments reached 4,537 in Trimester 3, which represents an eighty two percent increase on the prior corresponding period. New student enrolments climbed fifteen percent on the same basis and fifty one percent on the prior term. Growth at this scale is rare in the education sector and even rarer when it is broad based rather than tied to a single program.

ALG, the vocational education business, also posted solid results. New student enrolments increased twenty six percent from the previous term, while total student enrolments experienced only a small seasonal decline. This is exactly what you want to see in a diversified education group. Strong intake in one unit offsets temporary softness in another, and the overall trajectory remains upward.

The most significant development, however, is the recent Education Legislation Amendment Bill introduced into Parliament. Importantly, this Bill removes all references to student enrolment caps. The previous version of the legislation, which lapsed, created industry uncertainty by raising the possibility of artificial caps on student intake across higher education and vocational sectors. These caps would have constrained growth just as the sector was recovering post pandemic.

Their removal is a meaningful positive. It creates clarity. It stabilises the policy environment. And it provides a multi year runway for education providers with strong compliance systems and high quality programs. Edu Holdings fits that description. The company is already experiencing robust underlying demand. Now it can plan for growth without worrying about externally imposed volume restrictions.

As a result, the earnings outlook appears increasingly attractive. Expectations for CY25 EPS in the range of eight to nine cents and CY26 EPS of ten to eleven cents reflect the operating leverage built into the model. Combine this with an active buyback and a dividend and it becomes clear that the business is positioned to reward shareholders while investing for long term expansion. When you then consider that the stock trades on valuation multiples that are well below those of other listed education companies, it is easy to understand why Edu Holdings stands out.

Investors often overlook education businesses during periods of macro noise. Yet demand for education, particularly purpose driven, career aligned programs, tends to be resilient. Policy clarity only strengthens this dynamic. Edu Holdings is executing well and the structural environment is moving in its favour. That combination places it among the more interesting small cap growth stories over the next few years.

Credit Clear, A Smart M&A Pathway Toward Global Scale

Credit Clear (ASX: CCR) represents a very different type of opportunity. This is not a traditional education business. It is not a healthcare technology platform. Instead, it sits at the intersection of financial services, technology, and business process optimisation. The company’s strategy revolves around modernising the collections industry. This sounds straightforward, but it is a sector ripe for digitisation and operational improvement.

The recent acquisition of ARC Europe provides a clear illustration of how Credit Clear is positioning itself. ARC brings eight point eight million dollars of revenue and one point two four million dollars of EBITDA from the United Kingdom. The business serves clients across financial services, utilities, and insurance, and offers established relationships in a market that values both performance and reliability.

The transaction price of ten point nine million dollars, equating to approximately seven point two times forward EBITDA, appears rational. Importantly, the deal is expected to be accretive in year one. That matters because smart acquisitions build scale without diluting shareholder value. ARC also gives Credit Clear a launchpad for applying its digital collections platform to a larger and more mature market. The potential uplift in efficiency and customer engagement from a modern technology overlay can be significant. This creates opportunities for revenue expansions, cross selling, and improved margins.

The funding structure behind the transaction is also noteworthy. The company raised a twenty point seven five million dollar placement at twenty five cents per share. Notably, the chair invested eight million dollars personally. Insider alignment is one of the most powerful positive indicators in small cap investing. Chairs and founders do not invest millions of dollars into their own companies unless they believe in the long term value creation potential. This internal vote of confidence is an important signal that the acquisition is strategic, not opportunistic.

In addition, Credit Clear has a track record of leveraging acquisitions to create broader operational efficiencies. The collections industry is largely fragmented and still dominated by older systems and manual processes. A modern digital platform that can be plugged into multiple regions and verticals is highly scalable. If management continues to execute well, Credit Clear could transform itself into a much larger, more diversified operator over the medium term.

Investors often underestimate the power of a well executed M&A strategy, particularly when led by a chair with a history of success in building and scaling businesses. Credit Clear is still early in this journey, but the steps being taken suggest a deliberate and thoughtful pathway to significant growth. It is the kind of company that can compound quietly in the background and then suddenly appear much larger when the market finally pays attention.

Austco Healthcare, A Quiet Compounder in a Global Technology Niche

While Edu Holdings benefits from policy clarity and Credit Clear from strategic acquisitions, Austco Healthcare (ASX: AHC) represents yet another type of opportunity. This is a technology enabled healthcare solutions provider operating in an industry experiencing rapid demand growth. Ageing populations, increasing staffing pressures, and rising expectations for care quality are driving hospitals and aged care facilities to invest in more efficient and integrated communication and workflow systems.

Austco’s core products include nurse call systems, real time location services, and workflow management solutions. These tools allow facilities to monitor patients more effectively, reduce response times, and streamline staff operations. In an environment where healthcare providers are operating under increasing strain, the value of this technology is rising.

The company’s recent performance reinforces this trend. First quarter revenue grew fifty one percent to twenty three point two million dollars. This includes both organic growth and contributions from recent acquisitions. EBITDA increased to four point two million dollars, representing an eighteen point one percent margin, up from sixteen percent at the end of FY25. Margin expansion of this sort indicates that operating leverage is beginning to flow through the business. As the company scales, fixed costs are being absorbed more efficiently and profitability is improving.

Another positive indicator is the unfilled contracted revenue, which stands at fifty four point six million dollars. This provides meaningful visibility for future quarters and reduces earnings volatility. In industries with long sales cycles and complex procurement, contracted revenue is a strong sign of customer confidence and long term adoption.

Management has set a target of ten to fourteen percent organic revenue growth for FY26. Given the strength of the first quarter and the global demand for integrated healthcare technology, this appears achievable. In fact, the real opportunity lies in the longer term. As more hospitals and aged care facilities upgrade their infrastructure, solutions like those offered by Austco are becoming essential rather than optional.

The company also remains an attractive target for global healthcare technology distributors. The combination of strong IP, high customer retention, recurring service revenue, and expanding margins creates strategic value. Companies with established global sales networks often look for scalable, differentiated products that can be distributed across multiple markets. Austco fits this profile.

Despite these strengths, the valuation remains undemanding. An expected EBITDA of eighteen million dollars for FY26 and a net cash balance sheet suggest that the business is trading at a discount to its long term potential. For investors seeking exposure to healthcare technology with real revenue traction and a growing global footprint, Austco is one of the more compelling small caps to watch.

What These Three Companies Have in Common

Although Edu Holdings, Credit Clear, and Austco Healthcare operate in very different industries, they share important qualities that matter for long term investors.

They operate in sectors experiencing genuine structural change.
They are run by capable management teams executing clear strategies.
They are improving their earnings quality and visibility.
They are building operating leverage.
They trade on valuations that do not appear to fully reflect their growth trajectories.
They remain under owned in the market, which creates room for future institutional interest.
And they are delivering results at a time when many investors remain distracted by macro factors rather than fundamentals.

These are exactly the kinds of businesses that can produce attractive returns over time. Their progress tends not to be linear. But when operational execution intersects with sector tailwinds and market recognition, the valuation gap can close quickly.

In a market where volatility continues to create confusion about the strength of the underlying economy, companies like EDU, CCR, and AHC stand out. They are not reliant on hype cycles. They are not chasing speculative opportunities. They are simply executing well in industries where the demand for their products and services is increasing.

For investors willing to look past the noise and focus on fundamentals, these are three names that deserve a place on any serious small cap watchlist.

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Disclaimer: Edu Holdings (ASX: EDU), Credit Clear (ASX: CCR) and Austco Healthcare (ASX: AHC) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.