Trump is making waves: 3 high-growth ASX stocks to ride them

No matter the Trumpian pain spreading across stock portfolios there are always massive winners to be found among the small-caps, where a couple of positive operating updates can light a fire under valuations. 

Some small-caps might even be Trumpian winners given the US President's love of strategic commodities such as the rare earths the US needs to beat China, and develop defense capabilities, computers, batteries, or other advanced technologies. 

In this wire, fund manager and small-cap stock picker, Emanuel Datt, names three businesses he likes for big returns, which you could also associate as Trump winners. 

The Datt Capital Small Companies Fund has returned 25.7% per annum net of fees since inception in October 2023, so it might be worth paying attention here.

Bullish on tin prices

First, Datt says he's bullish on tin prices as a ballooning military conflict in the Democratic Republic of Congo (DRC) threatens to shut down the tin mining industry in the resource-rich country, which accounts for around 8% to 10% of total global supply. 

Most people will associate tin with everyday items like Coke cans, but it's also vital to defence industries for high-tech weapons and aeroplanes, where spending is set to soar across Europe in particular. 

Datt says the DRC conflict means tin prices have jumped about 20% over the last couple of months to near a three-year high of US$36,000 a tonne, with ASX-listed Tasmanian tin producer Metals X  (ASX: MLX) his pick to profit. 

"So, we think there's significant upside risk for tin prices and that will flow down to Metals X, especially in the next couple of months," he says. "Tin is supply constrained as a lot of previous production came out of Myanmar, it reminds me a lot of the uranium supply shock we saw pre-GFC."

Metals X shares have already surged 78% over the past 12 months, and the company now boasts a market cap around $575 million. For the 12 months to December 31, it grew profits 598%, to $101.8 million on sales up 42%, to $218.2 million. 

Notably, the DRC is also the subject of a neocolonial power struggle between China and the US over control of the supply of other strategic commodities it produces, including cobalt, lithium, and rare earths. 

Strategic commodities

As the scramble to secure rare earths and escape reliance on Chinese supply hots up, many powerful investors are already placing their chips on local suppliers. 

For example, Gina Rinehart's Hancock Prospecting has snapped up equity stakes in rare earths businesses such as Lynas Corporation (ASX: LYC), Arafura Rare Earths (ASX: ARU), Brazilian Rare Earths (ASX: BRE) and MP Materials (NYSE: MP) in the recent past. Hancock's also said to be kicking the tyres on just about any rare earths play around, so watch this space for more cash injections. 

Datt thinks another strategic commodity, niobium, offers smart investors a big chance to profit. Niobium producers are few and far between, and the commodity is used in steel production and high-tech industries like aerospace or medical imaging.

West Australian miner WA1 Resources (ASX: WA1) is the group to own as it plans to produce the commodity, according to Datt.  

"We think WA1's remarkably cheap given the quality of the asset and the strategic nature of niobium," he says. "The business has made really material strides forward in terms of de-risking the [development] project.

"I think it has significant upside over a two to three year period, the company is clearly picking up critical path items like permitting, environmental studies, and the PFS (prefeasibility study) we expect towards the end of the year, with perhaps a funding agreement to go alongside it."

Gold surges on geopolitical uncertainty

Datt also likes West Australian junior gold producer Vault Minerals (ASX: VAU) as a way to play the record-breaking gold price that topped US$3,055 an ounce on Thursday. 

Gold has soared as Trump spreads geopolitical chaos and the momentum appears unlikely to unwind over a potential four-year term that also includes a determination to lower the US dollar and interest rates, as more tailwinds for the precious metal.

Datt says he's bullish on gold and, as a bonus, suggests Vault Minerals is cheap, with the potential to catch a takeover bid. 

"I think there's a strong M&A angle, we've seen Spartan Resources (ASX: SPR) and Ramelius (ASX: RMS) merge, and we think Genesis Minerals (ASX: GMD) is a natural tie-up for Vault," says Datt. 

"Vault's basically a combination of Silver Lake and Red 5 as they merged last year. They operate three production hubs the most important is King of the Hills, a really large mill. 

"It had significant hedging in place that accounted for 40% of production, but those hedges are rolling off over the next 12 months and ultimately it sill has 60% exposure to spot gold prices. All they need to do is keep producing consistently, which the asset has done historically and it looks very economically attractive and they're still gushing cash."

Vault shares have surged 31.4% over the past year and it posted a net profit of $119.3 million for the six months to December 31. 

Of course, with potentially big returns comes higher risk, so it might be wise not to bet the house on these businesses and strap in for some Trump-induced volatility.