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2025 has been another spectacular year for gold prices. The yellow metal’s bull run stretches back years and — if City analysts are right — has plenty more gains to make. It’s why gold producers are considered by some to be among the hottest in the growth stock category.
Take Pan African Resources (LSE:PAF), whose shares have leapt 164% in value during the past 12 months. With production rising and gold hitting high after high, the number crunchers are unanimous in their opinion of further explosive price gains.
The most bullish forecast suggests Pan African’s share price will rise another 19% over the next year, to 112p per share. The average estimate among brokers is a lower 108.6p, but that still represents a healthy 15% increase.
That may seem like small potatoes given the gold stock’s enormous returns of the last year. But it’s not to be baulked at, in my view. Based on the City’s share price and dividend projections combined, investors could enjoy a tasty 19% total return over the next 12 months.
I think Pan African could deliver even better returns that this.
Gold shines
One reason is that broker forecasts have consistently failed to keep up with gold’s breathtaking price gains. HSBC analysts as recently as June tipped the precious metal to trade between $3,100 and $3,600 per ounce for the remainder of 2025.
Yet gold breached the upper end of that range just three months later and have since hit record peaks above $4,300 per ounce. To be fair, HSBC analysts aren’t the only ones to be caught cold by gold’s stunning rise.
Of course there’s no guarantee that gold’s price can keep up this pace. But accelerating demand from retail investors and strong central bank purchasing suggests further strength is possible. I feel the economic factors fuelling gold’s stunning rise — from tariff uncertainty and rising inflation, to ongoing US dollar weakness — should continue to play out.
A dirt cheap growth share
These forecasts point to strong, double-digit earnings growth for Pan African Resources. Broker estimates are never guaranteed, though, and the business could disappoint even if gold keeps rising.
Mining is a famously hard and unpredictable business, and profits can slump if operational issues occur. But having said that, Pan African’s strong record on the ground helps soothe any fears I have on this front. Production rose 6% in financial 2025, to 196,527 ounces, thanks in large part to its Mogale Tailings Retreatment (MTR) project being ramped up ahead of schedule.
Despite the gold miner’s impressive price gains, it still looks cheap in my opinion. I don’t think those low P/E and PEG ratios reflect its operational resilience and great growth potential, and reckon it’s a top stock to consider right now.
