Searching for the best cheap stocks to buy? The FTSE 250 remains packed with bargains even after the share index’s 11% rise over the last year. Some top companies have failed to keep pace. Some have headed in the other direction.
Take the example of Pan African Resources (LSE:PAF). Want to know why it’s a top cheap share to consider today?
Gold gains
Pan African Resources shares have fallen 18% since the start of 2026. It reflects a sharp drop in gold prices after years of strength and a disappointing production update from the miner (more on this later). As the US dollar regains ground — fuelled by expectations of interest rate hikes — further weakness could be in store.
But my bullish view on gold prices and (largely speaking) precious metals miners remains unchanged. Short-term turbulence was always a possibility as profit-takers looked for opportunities to book gains. Even after its recent reversal from February’s record near $5,600 an ounce, gold is up 173% over the last five years.
What next?
So what might propel gold prices higher again? Rising geopolitical uncertainty and global conflicts are historical drivers of metal prices, as are signs of macroeconomic stress and growing inflation. Each of these factors is currently growing in influence, which I’m confident will drive bullion demand.
It’s not just retail and institutional investors who are piling in, either. Central banks are also stocking up their gold reserves to diversify their holdings and manage risk. They bought another 850 tonnes worth in 2025 even as prices continued to rocket, according to the European Central Bank (ECB).
It noted that
Geopolitical tensions continue to drive strong central bank demand for gold.
Incredibly, global central banks now hold more gold in their reserves than they do US Treasuries for the first time.
So what about Pan African?
Investing in gold shares means exposure to the unpredictable nature of mining. Production issues like labour strikes, surging costs, and mechanical issues can be common.
However, holding shares in mining companies can also be far more lucrative. Why? Well each dollar rise in the gold price drops straight into their profits column, reflecting their relatively fixed cost bases. As a consequence, their share prices can rise far more sharply than metal values.
Accordingly, Pan African Resources shares have rocketed 440% in value since June 2021. That’s two-and-a-half-times more than gold itself.
The company’s profits have also been boosted by a sharp rise in production volumes. For 2026, the firm’s expecting output at the lower end of a 275,000-292,000 ounce range, it said last week. The news disappointed investors and sent Pan African’s shares lower. But it still suggests a sharp increase from 2025’s 197,000 ounces.
Top value for money?
City analysts expect the miner’s earnings to surge 226% this financial year. It leaves the company on a forward price-to-earnings (P/E) ratio of just 6.6 times.
On balance, I think Pan African’s a great cheap stock to consider right now. I already have enough exposure to gold, but if I didn’t I’d seriously consider the share for my own portfolio.
Should you invest £5,000 in Pan African Resources Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Pan African Resources Plc made the list?
Royston Wild does not hold any positions in the companies mentioned.
