I’m building a list of the best AIM growth stocks to buy this month. Here are two that I think investors need to take a close look at, and especially at current prices.
Pan African Resources
Grabbing exposure to gold could be a great idea as prices of the precious metal shoot through the roof. Bullion values have printed fresh highs for eight consecutive days in April, the first time this feat has ever been achieved.
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For gold bulls, buying shares in a mining stocks like Pan African Resources (LSE:PAF) could be a good idea. Its share price could reverse recent gains if metal prices reverse. But its rock-bottom valuation still makes it an attractive target in my book.
The South African miner trades on a forward price-to-earnings (P/E) ratio of 7.1 times. City analysts think earnings will rise 4% in the current financial year (to June 2024). And they think bottom-line growth will accelerate to 18% next year as the AIM firm ramps up production and its cost efficiency drive rolls on.
Gold’s stunning price gains has led some to tip a price correction in the coming days or weeks. But others expect the metal price to keep on soaring: analysts at UBS predict it will hit $2,500 an ounce by the end of 2024, up from current levels of $2,350.
Buying Pan African shares has a big advantage over investing in physical metal or a gold-backed exchange-traded fund (ETF). This way investors can potentially receive income as well as exploit a rising gold price.
For 2024, the AIM company carries a healthy 2.9% dividend yield.
Central Asia Metals
Copper prices are also tearing higher as fears over tightening Chinese supply grows. So I think investing in Central Asia Metals (LSE:CAML) is also worth considering. This AIM share owns the low-cost Kounrad copper asset in Kazakhstan which has a mine life stretching out to 2034.
As with gold, there’s no guarantee that red metal prices will keep ascending. Furthermore, buying any mining stock exposes me to a sector where operational problems can be common and devastating to group earnings.
But like Pan African Resources, I think the cheapness of Central Asia Metals’ shares make it hugely attractive. The miner trades on a forward P/E ratio of 9.9 times. It also packs a gigantic 7.7% dividend yield.
The near-term outlook for copper prices is certainly very encouraging. Rising metal demand from the green energy sector is tipped to push the market into deficit this year. News that China’s manufacturing sector moved back into growth in March is another positive omen.
Accordingly, analysts at Citi expect the industrial metal to soar to $12,000 per tonne within the next two years. That’s up from current levels of around $9,300.
Bright forecasts like this mean Central Asia Metals’ earnings are tipped to rise 27% in 2024 and 10% next year. As copper demand rises, and the business develops its asset pipeline, I think profits here could continue rising strongly beyond the short term.
