Zanaga Iron Ore Co Ltd isn't the only growth stock that could double again in 2018

The last year has been a hugely profitable one for investors in Zanaga Iron Ore(LSE: ZIOC). The company's share price has doubled at a time when the prospects for the iron ore industry have improved dramatically. As such, there is a generally bullish outlook from investors in the sector which means that further gains could be ahead.

However, it is not the only resources stock to have generated 100%+ returns in recent years. Reporting on Friday was a company which could also perform well in future after a strong track record of growth.

Improving outlook

The company in question is oil and gas exploration company Pantheon Resources(LSE: PANR). Its operational update showed that it is continuing to make progress with its strategy. Operations on its VOBM#5 well and preparations to begin testing on its VOBM#4 well are under way. And the company has also been conducting in-depth analysis on its VOBM#1 well as it seeks to get it back on-stream.

Analysis of a fall in production in Polk County in January has shown that the cause appears to be wellbore-specific factors. This is most likely a result of the wells having been shut in for extended periods. Encouragingly, it does not suggest that there has been a downgrade in the potential of the company's acreage.

With Pantheon Resources having risen by 166% in the last five years, it may be expected that the company's valuation is relatively high at the present time. However, with it due to move from loss into profit in the current year and then follow this with earnings growth of 388% next year, the company has a forward price-to-earnings (P/E) ratio of 8. This suggests that it could offer a wide margin of safety, as well as further upside potential.

Rising sentiment

Of course, Zanaga Iron Ore could also perform well in future. The prospects for the iron ore industry have turned around in a relatively short space of time. Demand from China has increased as the country has sought to invest more heavily in infrastructure developments. While this trend may or may not continue during 2018, the idea that the commodity 'super-cycle' is over may not prove to be correct. As such, there could be further steady growth in demand for iron ore over the medium term.

In terms of Zanaga's progress as a business, its strategy appears to be sound and it seems to have sufficient cash to make progress over the medium term. Certainly, it remains a relatively risky investment opportunity due to it being at a fairly early stage in its lifecycle and lacking the diversity of many of its peers. However, if the iron ore price remains buoyant and it can execute its strategy, its shares could deliver further gains in the long run. As such, now could be the right time for less risk-averse investors to buy it.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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