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I love a good bargain, and despite that FTSE 250Last year’s strong performance, it remains full of them. Are you looking for low dividend yields and market-beating dividend yields? Investors are spoiled for choice right now.
Here is what I consider to be one of the cheapest stocks in the index right now. Although I do not own shares in it today, I am looking to add it to my portfolio in the coming weeks. Want to know why?
To go looking for gold
Pan African Resources (LSE:PAF) shares have risen over the past year, driven by the rising price of gold. With the bull’s bull run looking in good shape, I expect gold stocks to continue to rise.
There are many reasons to expect precious metals to be strong, in my opinion. Another thing that has reignited this week is the uncertainty about the independence of the US Federal Reserve, shaking the markets and weakening the US dollar. It pushed gold prices to new highs near $4,635 an ounce.
I expect the US currency to continue to slide through 2026 and probably beyond, making it much cheaper to buy gold. Meanwhile, I expect the yellow metal to continue to gain as interest rates fall, inflation rises, and as global political instability increases.
It expands to grow
Pan African Resources is well placed to exploit this fertile ground for gold. Its flagship Mogale Tailings Retreatment (MTR) project in South Africa reached steady state production by 2024. And its Nobles property at Tennant Mines in Australia is growing slowly following virgin production in 2025.
Accordingly, FTSE 250 companies expect to produce 275,0000 to 292,000 ounces of gold this year. That rises to 197,000 by fiscal 2025. In the short term, Pan African has significant exploration capacity – particularly in the Tennant Creek Mineral Field in Australia’s Northern Territory – and a strong balance sheet to back this up.
The advantage of holding gold stocks over the physical metal or a gold exchange-traded fund (ETF) is a key factor. Investing in miners leaves people exposed to the unpredictable business of metal mining. In this case, the price could fall even if gold continues to rise if, for example, production ramps at Nobles run into problems.
Gold-plated transactions
But the benefits of intensive exposure can offset this. For example, if gold prices increase by 5%, the mining share’s profit may increase by 15% to 20% as it earns more per ounce while costs remain stable.
That is why the price of Pan African shares has increased by 233% in the past year, surpassing the increase in the price of gold by 72%.
Despite these huge advantages, the FTSE 250 miner still offers exceptional value for the entire cycle. At 122.4p per share, it trades on a forward price (P/E) ratio of 8.6 times this financial year (to June 2026).
And the next year, the Pan African salary drops sevenfold. I think the company – has been promoted to the FTSE 250 since CHECK on the market in October – could be one of the UK’s hottest mining stocks.
