UK gold stocks are delivering great returns for investors at the moment. It’s not hard to see why – with the price of bullion surging, companies that produce the commodity are seeing huge increases in profits.
Here, I’m going to highlight a UK-listed gold stock that is soaring but still looks very cheap. Could it be worth considering as a play on precious metals?
A Brazilian gold miner
The stock in focus today is Serabi Gold (LSE: SRB). It’s a small – but well established – gold mining company that operates in northern Brazil.
Serabi’s flagship asset is the Palito Complex, which consists of the Palito and São Chico underground mines. These mines have been producing gold for decades and last year yielded around 20,000 ounces.
It also has 100% ownership of the Coringa Gold Project, which is close to the Palito Complex and produced around 24,000 ounces of gold last year. Additionally, it has an exploration programme in place.
As I write this, Serabi’s share price is 333p, meaning that £1,000 buys 300 shares (ignoring commissions). In terms of past performance, the shares have risen about 150% over the last year and about 365% over the last five.
Surging revenues and profits
Now, small-cap gold stocks like this are typically risky investments because a lot can go wrong (I’ve been burnt in the past in this area of the market).
Risks include equipment failure, mine collapses, staff strikes, safety hazards, bad weather, adverse political interventions, and failed exploration projects. A dip in gold prices can also send a gold miner’s share price down sharply.
That said, I do think this stock looks quite interesting right now. For a start, the company’s revenues and profits are surging amid the spike in gold prices.
For 2025, Serabi’s revenue is expected to come in at $149m versus $95m in 2024. Meanwhile, net profit is expected to be around $50m versus $28m in 2024.
Looking ahead, analysts forecast revenue of $237m for 2026 along with net profit of $99m. In other words, profits are forecast to roughly double this year.
A dirt cheap stock
We also have a very low valuation. At present, the earnings per share forecast for 2026 is $1.31.
There’s no guarantee that earnings will actually come in at this level, of course. But if they were to, we are looking at a price-to-earnings (P/E) ratio of just 3.4 right now.
At that multiple, the stock looks undervalued. For reference, mid-cap UK gold miner Pan African Resources has a P/E ratio of about 11 at present.
One other thing to note is that analysts expect the company to start paying dividends soon. There’s no guarantee that it will, but there could be some income on offer from the stock in the near future.
Put all this together and there’s a lot to like. I think it’s worth a closer look right now.
