Finding the best shares to buy is never an easy task. But those who spotted the growth potential of Fresnillo (LSE:FRES) at the start of 2025 are probably opening the Champagne right now. That’s because the Mexican gold and silver mining expert has seen its market-cap surge by 132% since the start of the year!
To put this into perspective, a £10,000 investment in January’s now worth £23,200. By comparison, over the same period, FTSE 100 index investors would have only have £10,900 today.
So what’s driving this explosive growth? And could Fresnillo remain a top stock to consider buying today?
Investigating surging returns
There are a lot of factors driving the Fresnillo share price higher, not all of which can be attributed to management. With geopolitical conflicts heating up, demand for safe-haven assets like gold has simultaneously increased. As such, the price of these precious metals has climbed significantly during a time when Fresnillo’s production’s remained robust.
That’s a lucky and welcome tailwind for the business. However, the benefits have only been compounded by management’s grip on cost controls and discovering opportunities to improve operational efficiency.
Combined, these factors translated into a 29.3% surge in revenue during 2024. But with a lot of fixed production costs, the higher gold and silver prices allowed profit margins to expand aggressively. And subsequently, gross profits skyrocketed by 148% from $503.2m to $1,246.3m!
With that in mind, it’s not surprising to see the share price climb by a similar amount.
Still worth considering?
With such explosive growth under its belt and demand for gold seemingly robust, could Fresnillo possibly be among the best shares to buy today as it was in January?
When it comes to investing, there are never any guarantees. And as impressive as Fresnillo has been lately, there are some looming threats that could derail its progress.
Being a commodity-driven business, Fresnillo needs to make hay while the sun shines. Yet when it comes to silver production, things have started to wobble. Silver production in 2025 has started to slide. This is partly caused by planned mine closures, but also some operationally challenges such as equipment shortages and unexpected required maintenance.
At the same time, with its portfolio concentrated in Mexico, Fresnillo remains significantly exposed to the country’s mining regulatory environment. And lately, this has been growing increasingly restrictive, with potentially disruptive legislation making its way through government.
Needless to say, like most mining businesses, it’s a cyclical, risky enterprise. But when times are good, the stock can produce phenomenal returns. Personally, Fresnillo isn’t on my top shares-to-buy list right now.
With commodity prices near record highs, the shares are priced at a premium on continued growth expectations. But that premium could quickly evaporate when the cycle eventually shifts downward. Until then, Fresnillo’s staying on my watchlist.
