If you have a high tolerance for risk, then having a little exposure to the small side of the market could be a good idea.
That's because the potential returns on offer from ASX small-cap stocks can be incredible.
For example, Bell Potter has just named $135 million copper miner Aeris Resources Ltd (ASX: AIS) as a small cap to buy and is tipping huge returns over the next 12 months.
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An ASX small-cap stock to buy
According to the note, the broker has retained its buy rating and 23 cents price target on Aeris' shares.
Based on its current share price of 14.5 cents, this suggests that almost 60% upside is possible for investors.
To put that into context, a $10,000 investment would turn into $16,000 if Bell Potter is on the money with its recommendation.
Why is the broker feeling bullish?
Bell Potter highlights that the copper price has started to recover after a period of significant weakness. It believes this recovery could continue, which would be great news for this ASX small-cap stock. The broker said:
Since hitting a low of US$8,065/t in early February 2024, the LME cash copper price has run up to +US$9,000/t, breaking above its recent trading range and making an 11 month high. The price currently sits at ~US$8,750/t, for a gain of 8.5% in the last seven weeks. We remain bullish on the outlook for copper and continue to forecast rising prices based on supply disruptions, a finely balanced market, its direct exposure to the renewable energy/electrification thematic and broad-based demand that is not entirely dependent on China.
Commenting on why the broker thinks Aeris is a great option for investors, its analysts said:
AIS is a copper dominant producer with all its assets in Australia. Its near-term outlook is highly leveraged to the copper price and increasing copper grades and production at the Tritton copper mine. Successful delivery offers significant upside to the share price and a strategically attractive asset in Tritton, making AIS vulnerable as a corporate target.
