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I love a good bargain, and despite the FTSE 250‘s strong performance over the last year, it remains jam packed with them. Looking for low earnings multiples and market-beating dividend yields? Investors are spoilt for choice right now.
Here is what I consider to be one of the index’s best cheap stocks right now. While I don’t hold shares in it today, I’m looking to add them to my portfolio in the coming weeks. Want to know why?
Going for gold
Pan African Resources (LSE:PAF) shares have soared over the past year, driven by a booming gold price. With bullion’s bull run looking in great shape, I’m expected the gold stock to keep rising.
There are many reasons to expect precious metals to strengthen, in my view. One that’s dominated again this week is uncertainty over the US Federal Reserve’s independence, which is rattling markets and weakening the US dollar. It propelled gold prices to new peaks near $4,635 an ounce.
I’m expecting the US currency to keep slipping in 2026 and potentially beyond, making it increasingly cheaper to buy gold. Meanwhile, I expect the yellow metal to keep gaining as interest rates fall, boosting inflation, and as geopolitical instability increases across the globe.
Expanding for growth
Pan African Resources is well placed to capitalise on this fertile backdrop for gold. Its high-margin Mogale Tailings Retreatment (MTR) project in South Africa reached steady‑state production in 2024. And its Nobles asset at Tennant Mines in Australia is steadily ramping up following maiden production in 2025.
Accordingly, the FTSE 250 firm expects to produce 275,0000 to 292,000 gold ounces this year. That’s up from 197,000 during fiscal 2025. Beyond the short term, Pan African has significant exploration potential — particularly in the Tennant Creek Mineral Field in Australia’s Northern Territory — and a strong balance sheet to support this.
The beauty of holding gold stocks over physical metal or a gold-tracking exchange-traded fund (ETF) is the leverage factor. Investing in miners leaves individuals exposed to the unpredictable business of metals excavation. In this case, the share price could fall even if gold keeps rising if, for instance, the production ramp-up at Nobles hits problems.
A gold-plated bargain
But the benefits of leveraged exposure can more than offset this. For instance, if gold prices rise 5%, a mining share’s profits could rise 15% to 20% as it earns more per ounce while costs remain relatively stable.
This is why Pan African’s share price has risen 233% over the past year, eclipsing the 72% increase in gold prices.
Despite these heady gains, the FTSE 250 miner still offers exceptional all-round value. At 122.4p per share, it trades on a forward price-to-earnings (P/E) ratio of 8.6 times for this financial year (to June 2026).
And for next year, Pan African’s earnings multiple drops to seven times. I think the company — promoted to the FTSE 250 from the AIM market in October — could be one of the UK’s hottest mining stocks.
