Ftse 250 Stock To Consider

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Ftse 250 Stock To Consider

This FTSE 250 Stock Gained 797% In 5 Years

The FTSE 250 is a very interesting index as it has a diverse range of listed businesses. Also, a number of mid-cap stocks from the FTSE 250 index have delivered outsized gains in the last 5 years.

Pan African Resources (PAF) is also a part of the FTSE 250 index and a very interesting stock. In the last 5 years, the Pan-African Resources stock has gained 797%. After that, the next stock that delivered massive gains was Goodwin, which is up by 313%.

Pan African's Profits Are Tied To Gold Prices

So, it is clear that Pan African Resources stock is in a league of its own when it comes to market-crushing returns. But, this also makes one wonder what the driving force is behind these gains?

To sum up the gains in the Pan African Resources stock, the one word that comes to mind is Gold. Pan African Resources is a gold miner, and higher gold prices lead to strong revenue.

The profits of Pan African Resources are highly tied to the prices of gold. So, whenever the Gold prices go on a bullish rally, this directly contributes to Pan African Resources' bottom line.

In the last 5 years, the Gold prices have been up by 175%, which has also translated to higher share prices of Pan African Resources.

The thing with gold miners is that their spending is usually fixed while the revenue is tied to gold prices. So, if the gold prices take a nosedive for some reason, it also affects the company's profitability.

The fact that the extraction costs stay fixed is the biggest benefit for Pan African Resources. Back in 2020, the net profit of Pan African Resources was $44 million. Looking ahead, analysts think the net profit will be $470 million in this fiscal year.

Going forward, the fate of the Pan African Resources will be tied to the gold prices. Given the high geopolitical tension and the gold demand, there's a good chance that Pan African Resources stock could deliver outsized gains again.

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