The FTSE 250 is a very diverse index containing a multitude of global businesses. We can see this just by looking at the three best-performing mid-cap stocks over the past five years.

Pan African Resources (LSE:PAF) leads the pack, with a market-crushing return of 797%. Next comes a huge 348% gain from TBC Bank Group (LSE:TBCG), while Goodwin (LSE:GDWN) narrowly gets bronze with 313%. Note, none of these returns include dividends!

So, here we have an African-focused gold miner, an emerging markets bank (Georgia’s TBC), and family-run engineer Goodwin. An honourable mention should go to construction group Galliford Try, which has also returned around 312% over five years.

What has driven these extraordinary gains?

Benefiting from big investing trends

Pan African’s eye-popping gain can be summed up with one word: gold.

As a gold miner, its profits are highly leveraged to the price of the yellow metal. And even after the recent pullback, gold is still up by roughly 175% in five years.

When gold prices soar, a miner’s profits will often grow much faster than the price of the metal itself because extraction costs stay relatively fixed. As such, Pan African’s net profit has exploded from $44m in 2020 to an expected $470m this fiscal year (ending June). Wow!

Meanwhile, Goodwin’s benefitting from the defence and nuclear renaissance. It makes high-integrity castings, particularly those that don’t melt under extremely high temperatures. Not many companies in the world specialise in these.  

Bottom-line profits have grown at an annualised rate of 25% since 2020. And Goodwin investors have enjoyed lots of dividends along the way. 

Is either still worth considering?

The last time I wrote about Goodwin (in October), I concluded that the stock looked too pricey. Back then, the price-to-earnings (P/E) ratio was 60 while the dividend yield was just 1.4%.

Since then though, the Goodwin share price has crashed almost 40%. And now we have a P/E ratio of 24 and a 2.2% yield that may be worth considering.

Much of this loss came in a single day in March when Goodwin revealed it had lost two major tenders in its Mechanical Engineering division (worth about £60m). And it has delayed the dispatch of valves to some customers due to the Iran war.

Taking a longer-term view, however, it should have plenty of growth options across the European nuclear, aerospace and defence sectors. After all, it has finally dawned on Europe that these things are actually rather important in a fragmenting international order.

Pan African’s fate will, of course, be dictated by the gold price. Personally, I prefer Fresnillo from the FTSE 100 as it mines silver too. But both stocks could tank if gold does.

Ultra-cheap stock

Turning to TBC, I’m more bullish on this bank stock. It’s trading at just 5.7 times forward earnings, while offering a 6.2% forecast dividend yield.

Granted, any economic downturn in Georgia is a risk, while the political scene there is still on edge. But this economy is tipped to grow strongly for years, as is Uzbekistan’s (TBC’s second market).

The lender is extremely profitable, benefitting from its duopolistic position in Georgia and an increasingly digital-first approach. Given the extremely low valuation, strong growth potential, and generous starting dividend yield, I think TBC stock is still worth looking at today.