The best-performing FTSE 100 stock from last year was Fresnillo (LSE:FRES). The price popped 410%, easily taking the crown from other peers. If someone had decided at the start of this year to invest £5k on the premise that the rally would continue, how would it currently be looking?
Starting last year
Before we get to the 2026 performance, it’s important to understand why the stock did so well last year. The primary driver behind last year’s surge was the dramatic increase in precious metals prices. Gold repeatedly hit record highs based on several supporting factors. Central banks continued buying the metal, investors sought safe-haven assets and expectations grew that interest rates would eventually move lower.
Silver also enjoyed an exceptional year, benefiting not only from its status as a precious metal but also from growing industrial demand linked to renewable energy and electronics. All of this helped Fresnillo, as it’s the world’s largest primary silver producer and a major gold miner too. So, rising commodity prices flowed directly into its profits. Importantly, costs didn’t increase at the same pace, meaning much of the higher revenue translated into stronger margins and earnings growth.
The situation this year
Fresnillo is down 27% so far this year. That means our hypothetical £5k would currently be worth £3,650. While that might sound alarming, I don’t think the recent weakness necessarily signals that the investment case has fallen apart. Instead, it highlights just how cyclical mining stocks can be and how quickly investor sentiment can shift after a spectacular rally.
In January, some investors had set the bar very high for Fresnillo. Yet we’ve seen management reduce its production outlook for both silver and gold this year following changes to mine plans and operational sequencing. Further, gold and silver prices have fallen, which negatively impacts the stock just as the strong rally last year helped to support it.
Looking forward
Despite the pullback, I believe the outlook for the remainder of the year is positive. There are plenty of reasons why gold and silver prices could start to rally again, particularly amid higher geopolitical tensions. Further, the recent fall in precious metals prices provides a much better entry point that could attract buyers.
At a company-specific level, Fresnillo is also in a good position. After reporting sharply higher profits and cash flow following its outstanding 2025 performance, it has the flexibility to invest in future growth. EBITDA rose by 80.7% to £2.07bn, with net cash reaching £1.41bn, significantly strengthening the balance sheet.
That said, the performance in 2025 was clearly an outlier. I’m not sure it’ll ever generate such strong returns in a calendar year again. Fresnillo has very little control over the prices it receives for gold and silver, and this needs to be kept in mind.
On balance, I have enough exposure to commodities already, but investors who don’t could consider a small allocation to Fresnillo.
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Jon Smith does not hold any positions in the companies mentioned
