![Gold miner Perseus may be worth a punt for a brave investor.](/content/dam/images/g/n/6/7/9/t/image.related.afrArticleLead.620x350.gu71ca.png/1486442811428.jpg)
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While much of the market's recent focus has been on the hefty short-term gains generated by big miners BHP Billiton, Rio Tinto and Fortescue Metals, Credit Suisse thinks it's time for African gold miner Perseus Mining and graphite play Syrah Resources to surprise with strong returns.
Credit Suisse regularly ranks the projected returns over the next 12 months for up to 200 ASX stocks across banking, industrials, healthcare, consumer goods and mining, which its analysts cover.
The projected returns comprise expected share price growth plus dividends. The share prices jump around from day-to-day of course, and it's a point-in-time exercise but on February 7, Perseus and Syrah were sitting at the top. Both are labelled with an "outperform" rating.
Perseus, whose main operation is the Edikan open pit gold mine in southern Ghana, has a target share price in 12 months' time of 85¢. It is currently sitting at around 31¢ and was as high as 67¢ in early November 2016. Credit Suisse's projected total return is 179 per cent.
Syrah, which is much more high-profile and has been through plenty of ups and downs including the exit of its managing director Tolga Kumova in October 2016, is the great hope for investors who believe that industrial graphite is the material of the future that will power the digital age where Elon Musk's Tesla is the poster child.
The Balama deposit in Mozambique is the centrepiece for Syrah, which in February appointed former BHP Billiton executive Shaun Verner as its chief executive.
Syrah shares were at $6.66 in June 2016 but are now trading at less than half that at around $3. Credit Suisse has a target price of $7.80 on Syrah, and the projected return over the next 12 months is 155 per cent.
Resource investors generally accept there is a much higher risk and reward element at play in the sector.
Deutsche Bank's equity strategist Tim Baker in an update on February 3 said overall sharemarket earnings should hold up well in the current profit reporting season, mainly because of resources stocks benefiting from stronger commodity prices.
Time to jump out?
It is also important to keep a close eye on price-earnings multiples more broadly across the market, and consider whether a jump in P-E multiples might be a signal that a stock might be about to go into reverse.
Mr Baker identified five stocks which had experienced a jump of more than 10 per cent in their P-E multiples compared with three months ago after attracting more support from investors. Energy utilities group Duet, media company Nine Entertainment and insurer QBE headed that list, followed by Seven West Media and childcare group G8 Education.
On the Credit Suisse number-crunching and projections, Duet is forecast to deliver an 11 per cent total return for an investor over the next 12 months, QBE is projected to generate a 5 per cent return. Nine Entertainment is expected to deliver a 22 per cent return including dividends, while Seven West is forecast to produce a 19 per cent return.
Deutsche's Mr Baker also put Woolworths, Medibank and IAG among the group of stocks which may also face a potential reversal in their share price during February.