Broker says these small-cap ASX shares are buys with big return potential in 2024

Bell Potter is tipping big returns from these small caps next year.

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Are you looking to add some small-cap ASX shares to your portfolio in 2024?

If you are, then it could be worth taking a look at the two small caps listed below that Bell Potter rates as buys for the year ahead.

Here's what the broker is saying about these small caps:

Aeris Resources Ltd (ASX: AIS)

Bell Potter sees a lot of value in this copper miner's shares after a very disappointing year. Particularly given how a recent capital raising has de-risked its balance sheet. It explains:

AIS represents a copper dominant mining exposure whose primary assets are the Tritton Copper Operations in NSW, Cracow Gold Mine in QLD, Mt Colin Copper Mine in QLD. Its near-term outlook is highly leveraged to rising copper grades at the Tritton copper mine, where new high grade ore sources are growing production in FY24. Exploration success at Constellation is likely to sustain higher production levels over the long term. The Cracow gold mine in QLD is running to plan and offers an unhedged gold exposure that is highly leveraged to a rising gold price. Recent refinancings have de-risked the balance sheet and we are of the view that AIS is well positioned to deliver on its production targets.

Bell Potter has a buy rating and 23 cents price target on this small-cap ASX share. This implies a potential upside of 76% over the next 12 months.

Environmental Group Ltd (ASX: EGL)

Another small-cap ASX share that Bell Potter rates as a buy for the year ahead is Environmental Group.

It is an environmental engineering company that is committed to the protection of the environment by improving air quality, reducing carbon emissions, enhancing waste to energy production, and lifting water quality.

Bell Potter believes that the company is in a strong position for growth in FY 2024 and beyond. It explains:

EGL operates five core segments that are all profitable, growing >15% p.a. and exposed to favourable environmental growth trends (e.g. landfill diversion, PFAS water treatment, battery minerals development). EGL is guiding for >30% EBITDA growth in FY24e, however we think this represents more of a starting point than an end point. The Baltec business in particular is in a clear upgrade cycle, while we expect a potentially news flow rich 2024 in Waste and Clean Air with a material portion of the group's project proposals subject to near-term decisions. Broader industry validation through potential sales of the PFAS solution also remains a key area of upside.

The broker has a buy rating and 34 cents price target on its shares. This suggests a potential upside of 31% over the next 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Environmental Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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