Meet the speculative ASX stock that could rise 200%

Bell Potter thinks this high risk stock could triple your money.

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The Australian share market has historically provided investors with a return of approximately 10% per annum.

But that doesn't mean that all ASX stocks rise by that level. Some will underperform and some will outperform the market.

And sometimes you will see shares that deliver mouth-watering returns that make the market return look minuscule.

The good news for investors with a high tolerance for risk is that analysts at Bell Potter see potential for one speculative ASX stock to do exactly this. In fact, they see scope for its shares to triple in value over the next 12 months.

Which ASX stock could rocket?

According to a note this morning, the broker believes that Meteoric Resources NL (ASX: MEI) shares could be extremely undervalued by the market.

In response to a revised resource estimate for the Capão do Mel (CDM) rare earths deposit at the Caldeira Project in Brazil, the broker has reaffirmed its speculative buy rating and 50 cents price target on its shares.

Based on its current share price of 16.5 cents, this implies that the ASX stock could rise 200% between now and this time next year.

What is the broker saying?

Bell Potter was pleased with the ASX mining stock's resource estimate. It commented:

The M+I [measured and indicated] Resource at CDM defined 85Mt at 3,034ppm TREO, which included a high-grade core of 36Mt at 4,345ppm TREO using a 3,000ppm cut-off. Importantly, the high-grade zone we believe supports production over the first ~8 years (BPe). The scoping study, which was delayed until the release of the updated CDM Resource, is due for imminent release, and will be a major catalyst for the stock and broader ion adsorption/ ionic clay (IAC) projects. The updated resource for the entire Caldeira project increases to 619Mt at 2,538ppm TREO.

Its analysts then explain why they think investors should consider buying Meteoric Resources shares. The broker said:

We view the Caldeira project and MEI as being attractively positioned vs peers and maintain our valuation of $0.50/sh and Speculative Buy recommendation. We anticipate MEI will look to de-risk the project over the next 12 months, with the key catalyst being the release of the scoping study on its Southern projects. We currently estimate the market is factoring in less than the current depressed spot price for NdPr of ~US$50/kg, which differs significantly from our outlook of US$95/kg over the long term.

All in all, this could make it worth a closer look if you are wanting exposure to rare earths and have a high tolerance for risk.

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 no position in any of the stocks mentioned. 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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