The hunt for the best stocks to buy is never ending. But investors who spotted the growth potential of Endeavour Mining (LSE:EDV) at the start of 2025 are likely pretty pleased. The West African gold mining enterprise has been successfully ramping up production of the shiny yellow metal. And when paired with rising gold prices, the group achieved record-breaking free cash flow that has sent the stock flying by 75% since the start of the year.
Considering the FTSE 100 is only up by around 11% since 2025 kicked off, Endeavour shareholders have massively outperformed the market. But as every investor knows, past performance isn’t an indicator of future results. So the question now is, can Endeavour continue to deliver robust market-beating gains moving forward? Let’s explore.
The bull case
As previously mentioned, over the first six months of 2025, the company ramped up its gold production by an impressive 38%, from 470,000 to 647,000 ounces year on year. With an all-in cost of $1,281 per ounce versus an average selling price of $2,953 per ounce, margins and earnings have skyrocketed.
Yet, as it turns out, this could be just the tip of the iceberg. Why? Because the group’s exploration activities are also hitting crucial milestones.
The definitive feasibility study (DFS) for its Assafou project remains on track for completion in early 2026. This aims to confirm the project’s economic viability and check the final planning boxes before construction can begin.
Providing the DFS comes back with no nasty surprises, Endeavour’s expansion of gold production could be set to increase by another 329,000 ounces per year if the initial projections are correct. And with an estimated lifespan of almost 15 years, Assafou could unlock an enormous source of wealth for shareholders over the long run. And with other projects in the exploration pipeline, further projection increases could also materialise in the future.
What could go wrong?
As impressive as Endeavour’s growth potential seems, there are some notable risks that investors must consider. Even if the DFS comes back with a positive result, the firm still has to navigate through an ocean of operational, regulatory, and political challenges.
Delays in production at Assafou could result in missing earnings targets. But even if that doesn’t happen, profits and cash flow may still fall short. After all, mining incurs significant fixed costs, which work wonders when commodity prices are rising since it leads to rapidly expanding profit margins.
However, suppose gold prices decide to reverse due to a market rotation out of precious metals? In that case, Endeavour’s future growth might prove disappointing.
The bottom line
So should investors be considering Endeavour Mining as a potential top-notch stock to buy even after its recent share price rally?
The business certainly has some exciting growth prospects, provided gold prices don’t suddenly dip. However, at a price-to-earnings ratio of 37, it seems investors are already baking in a lot of the group’s future production potential into the share price.
As such, the slightest hiccup in operations could be all that it takes for a sharp and sudden sell-off. Put simply, the mining stock’s a classic case of high-risk, high-reward. This isn’t something I’m personally tempted by. But growth investors with a higher risk tolerance may want to investigate Endevour further.
