
This stock has outperformed Tesla – it's still the right time to buy
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest.
This column is not in the habit of researching shares that trade near an all-time high as it would rather take a more contrarian tack, in the view there is better value to be found in what is not being talked about rather than what seems popular.
Equally, the views of the market must be respected – even if they are not always right – and in this context it is interesting to note both the onward march in the price of gold and the very favourable response given to what were, frankly, mixed quarterly results from Barrick Gold last week.
Both, in turn, point us toward Pan African Resources as a stock that may be worthy of further scrutiny.
Despite precious little fanfare gold trades at a new all-time high, as the metal enjoys its third major bull run since President Richard M. Nixon withdrew the dollar from the gold standard in 1971 and smashed up the Bretton Woods monetary system in the process.
Concerns over sticky inflation, galloping government debt and geopolitical tensions could all be giving gold a boost, as could the dilemma that faces central banks.
They would like to cut interest rates to give a helping hand to growth and reduce the burden of Western governments' interest payments on their alarming debts, but at the same time are obliged to try and squeeze inflation back toward their 2pc target.
Given a choice, this column believes growth will win out and chances may be taken with inflation to the potential benefit of stores of value such as gold.
Even central banks are getting in on the act. World Gold Council data shows that monetary authorities around the world have acquired over 1,000 tonnes of the metal in each of the last three years, prompting stories of long waits for delivery of physical metal from internationally recognised vaults.
Whatever the reason, gold has now done better (in capital terms) than Alphabet, Apple, Microsoft and Tesla on a three-year view, despite investors' ongoing predilection for technology stocks, thanks to AI, and apparent disinterest in the precious metal. This does at least fit with the investment thesis on gold espoused by this column more than once.
It is also interesting to note how shares in Barrick Gold moved smartly higher after the miner's fourth-quarter and full-year results for 2024, even though production guidance for 2025 missed expectations owing to ongoing problems in Mali, and management predicted another increase in all-in sustained cost (AISC) of gold production of up to 5pc, to a maximum of $1,560 an ounce, after an 11pc jump in 2024.
Barrick Gold's earnings per share in the fourth quarter surged by 61pc year-on-year on a stated basis (and by 56pc on adjusted numbers), to show just how much gearing gold miners provide in the metal's price – and that increase came off an average gold price for the quarter of $2,657 an ounce, compared to the spot price of $2,929 that prevails at the time of writing.
If the metal keeps on rising, the upside surprise potential in miners' earnings (and dividend payments) seems considerable.
Our exposure to gold miners is somewhat diminished after last year's takeover offers for Centamin and Shanta Gold, even if both helped to top up Questor's portfolio pot.
We still have Resolute Mining but that one is ensnared in the same political problems in Mali as Barrick Gold, and the West African nation represents a much larger percentage of output at Resolute.
That stock could yet come good, but it may be worth adding another name to the mix – Pan African Resources.
Last week's first-half results for the six months to the end of December had their flaws, not least that profits grew only modestly, thanks to a 3pc drop in output and a 29pc jump in AISC to $1,675 an ounce, part of which was due to well-documented problems with the South African power grid operated by Eskom.
Those challenges are unlikely to go away in a hurry, and represent a risk to the investment case, but last December's acquisition of Tennant Consolidated in Australia brings welcome geographic diversification and a big potential kicker to overall group gold output from the year to June 2026 onwards.
That deal brings dangers, too, as group debt is higher, and the operations are in a different jurisdiction but forward price-to-earnings ratios of just over six times for fiscal 2025 and below four times for 2026 reflect those risks and ongoing scepticism that gold will maintain its strong run.

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Revealed: The destinations where five-star hotels cost less than £200
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Look through the noise and this brickmaker is set for brisk growth
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. An extended period of high inflation, restrictive monetary policy and disappointing GDP growth has left investor confidence in UK-focused firms at a low ebb. In Questor's view, this equates to a significant long-term buying opportunity. After all, weak market sentiment means the valuations of UK-focused companies are exceptionally low and provide scope for substantial upward reratings – and with the UK economy's performance already showing signs of improvement, stronger operating conditions could equate to a brisk rate of growth in company profits over the coming years. Indeed, the UK economy expanded by 0.7pc in the first quarter of the year. Although the Bank of England expects growth to fall to just 0.1pc in the second quarter, 100 basis points of interest rate cuts and further monetary policy easing are set to have a positive impact on long-term GDP growth. When coupled with a forecast fall in inflation to 2pc over the medium term, the outlook for UK-focused firms such as Michelmersh is encouraging. The brick manufacturer, which generates 95pc of its revenue in the UK, recently released a trading update stating it is on track to meet financial expectations for the full year. It is forecast to deliver a 16pc rise in earnings, followed by further growth of 12pc next year, as it seeks to pass higher costs onto its customers. The firm should be a major beneficiary of a period of modest inflation following what is widely expected to be a temporary spike. Not only could a slower pace of price rises put less pressure on the company's profit margins, it should equate to higher demand for new homes – and the bricks they require – as falling interest rates make property purchases more affordable. In the meantime, Michelmersh's financial position suggests it is well placed to overcome potential economic challenges as monetary policy changes take time to have their desired effect. Its net cash position, for example, amounts to £3.7m, while net interest costs were covered over 38 times by operating profits in its latest financial year. Despite the prospect of double-digit earnings growth, the stock currently trades on a price-to-earnings ratio of just 13.8. This suggests it offers a wide margin of safety and scope for further capital growth after rising by 33pc since being added to our Aim portfolio in January 2018. In doing so, it has outperformed the FTSE Aim All-Share index by 62 percentage points. Alongside the potential for capital gains, the company offers income investing appeal. It currently yields 4.1pc from a dividend that was covered a healthy 1.8 times by earnings last year. This suggests it can afford to pass a substantial part of future profit growth onto investors in the form of higher payouts. Clearly, Michelmersh is a cyclical company. Its share price, and financial prospects, could fluctuate to a relatively great extent based on the economy's performance. While inflation remains elevated, interest rates are still high and GDP growth could yet plummet in the second quarter, the long-term outlook for the UK economy is becoming increasingly upbeat. Therefore, we remain optimistic about the stock's future prospects. Its solid financial position, modest valuation and strong earnings growth forecasts mean that it continues to offer a favourable risk/reward opportunity. Questor says: buy Ticker: MBH Share price at close: £1.13 Update: FD Technologies Another of our Aim portfolio holdings, FD Technologies, recently announced that its board has agreed to the terms of a prospective acquisition by TA Associates. Subject to shareholder approval, investors in the software company will receive £24.50 in cash for each share held. Given that FD Technologies' share price currently trades little more than 1pc below that figure, it will now exit the portfolio. It has produced a 46pc capital loss since being added in June 2018, which compares with a 31pc decline for the FTSE Aim All-Share index over the same period. Questor says: sell Ticker: FDP Share price at close: £24.20 Update: Gamma Communications Finally, telecoms company Gamma Communications recently moved to the main market. As a result, it is no longer eligible for inclusion in our Aim portfolio and will now be removed. Since being added in January 2018, it has produced an 86pc capital gain. This is 115 percentage points ahead of the FTSE Aim All-Share index's return.