Analysis of Investment Opportunities in Rare Earth Metals
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Fool
- Current Market Situation: Rare earth metals primarily come from China, and their importance in electric vehicles and the defense industry means that supply restrictions could severely impact automotive production, particularly in the electric vehicle sector, with far-reaching consequences.
- MP Materials' Leading Development: As a frontrunner in the rare earth metals industry, MP Materials operates a mine in California and has processing capabilities, with an expected adjusted profit in Q1 2026, indicating potential for sustainable profitability.
- Challenges for USA Rare Earth: USA Rare Earth is building a mine in Texas, which will take several years to complete and is currently unprofitable; however, it is aggressively acquiring assets, including an operating mine in South America, showing promising progress.
- High-Risk Profile of The Metals Company: The Metals Company plans to build an undersea mine, facing regulatory approvals and high costs; while it has significant growth potential, it is only suitable for investors with a high-risk tolerance, as it may continue to incur losses in the short term.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy USAR?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on USAR
Wall Street analysts forecast USAR stock price to rise
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 19.980
Low
15.00
Averages
22.75
High
28.00
Current: 19.980
Low
15.00
Averages
22.75
High
28.00
About USAR
USA Rare Earth, Inc. is a supplier of sintered neo magnets and other rare earth metals. The Company is engaged in developing a NdFeB magnet manufacturing plant in Stillwater, Oklahoma, and intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to both supply its magnet manufacturing plant and market surplus materials to third parties. It is focused on developing domestic rare earth production that offers sustainable and secure domestic supply of materials critical to key industries. Its vertically integrated approach consists of sourcing rare earth elements (REEs), in addition to other critical minerals such as gallium, to producing finished NdFeB magnets. The Company serve a variety of industries, such as defense, robotics, electric vehicles, wind power, appliances, cordless tools and computing and semiconductors. The Company owns, Less Common Metals Ltd., which is a scaled ex-China rare earth metal and alloy manufacturer.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Analysis of Investment Opportunities in Rare Earth Metals
- Current Market Situation: Rare earth metals primarily come from China, and their importance in electric vehicles and the defense industry means that supply restrictions could severely impact automotive production, particularly in the electric vehicle sector, with far-reaching consequences.
- MP Materials' Leading Development: As a frontrunner in the rare earth metals industry, MP Materials operates a mine in California and has processing capabilities, with an expected adjusted profit in Q1 2026, indicating potential for sustainable profitability.
- Challenges for USA Rare Earth: USA Rare Earth is building a mine in Texas, which will take several years to complete and is currently unprofitable; however, it is aggressively acquiring assets, including an operating mine in South America, showing promising progress.
- High-Risk Profile of The Metals Company: The Metals Company plans to build an undersea mine, facing regulatory approvals and high costs; while it has significant growth potential, it is only suitable for investors with a high-risk tolerance, as it may continue to incur losses in the short term.
See More
Analysis of Investment Opportunities in Rare Earth Metals
- Importance of Rare Earth Metals: Rare earth metals are crucial in various applications, including cellphones and automobiles, particularly in electric vehicle production, where supply constraints could severely impact overall market performance.
- MP Materials' Leading Position: As a frontrunner in the rare earth metals sector, MP Materials operates a mine in California and has processing facilities, with expectations of achieving adjusted profitability in Q1 2026, indicating potential for sustainable profits.
- USA Rare Earth Development Challenges: USA Rare Earth is building a mine in Texas, and while its acquisition strategy has bolstered material processing capabilities in the U.S. and Europe, its current lack of profitability may deter conservative investors.
- The Metals Company High-Risk Potential: The Metals Company aims to establish an undersea mine, facing regulatory approvals and high construction costs, presenting significant risks but potentially offering substantial growth opportunities for aggressive investors.
See More
MP Materials Corp. Sues USA Rare Earth Over Technology Theft Allegations
- Lawsuit Background: On June 28, MP Materials Corp. filed a lawsuit against USA Rare Earth, alleging theft of proprietary grain boundary diffusion technology by former engineer Kevin Elkins, seeking at least $5 million in damages, which underscores the company's strong stance on protecting intellectual property.
- Intensifying Competition: MP claims that USA Rare Earth conducted a 'raiding mission' by hiring at least eight key employees, reflecting the escalating competition among companies racing to establish a U.S. rare-earth supply chain, which could reshape the industry landscape.
- USA Rare Earth’s Rebuttal: USA Rare Earth denied the allegations, labeling them as 'baseless,' and argued in a Texas court filing that the technology is 'readily ascertainable via independent development and reverse engineering,' indicating confidence in their technological capabilities.
- Market Outlook: While MP Materials is viewed as a promising investment, analysts suggest that certain AI stocks may offer greater upside potential and lower downside risk, indicating potential challenges for MP's position in investors' minds.
See More
Kazakhstan Project Sparks Political Controversy
- Funding Support: At least 14 companies linked to the Trump and Lutnick families are seeking over $8.9 billion in federal support, raising concerns about potential conflicts of interest due to the substantial funding involved.
- Political Investigation Calls: Democratic lawmakers have called for investigations into investments related to senior officials' family members, emphasizing the need for transparency in government-backed mining initiatives to prioritize national interests over personal gains.
- Mining Agreement Context: The agreement secured by Trump and Lutnick in 2025 grants an American-led venture access to one of the world's largest undeveloped tungsten deposits, with the project eligible for up to $1.6 billion in federal financing, highlighting strategic resource diversification efforts.
- Market Reactions: While stocks of Critical Metals and Energy Fuels edged down, USA Rare Earth and ASP Isotopes saw premarket gains of 1% to 2%, indicating varied market responses to the project amidst ongoing scrutiny.
See More
Opportunities and Risks in Rare Earth Metals Market
- Surging Market Demand: The International Energy Agency forecasts a 50% to 60% increase in demand for rare earth metals by 2040, primarily driven by new technologies like electric vehicles and AI, indicating significant market opportunities for related companies.
- Supply Risk from China: China's control over the majority of rare earth metal supplies was highlighted by a 10x price surge in Japan following export restrictions in 2010, underscoring the strategic importance of these metals and prompting countries to seek alternative sources.
- Divergent Business Developments: The Metals Company is attempting to develop an undersea mining operation and is currently unprofitable, but U.S. regulatory changes may accelerate its progress; meanwhile, USA Rare Earth has quickly built a processing business through acquisitions, with production expected to start in 2028.
- MP Materials' Competitive Edge: MP Materials has established complete mining and processing facilities and is generating positive earnings on an adjusted basis, positioning itself as a leader in the rare earth metals market and attracting investor interest.
See More
Opportunities and Challenges in Rare Earth Metals Market
- Surging Market Demand: The International Energy Agency forecasts a 50% to 60% increase in demand for rare earth metals by 2040, primarily driven by new technologies like electric vehicles and AI, indicating significant market opportunities for companies like TMC, USA Rare Earth, and MP Materials.
- Differing Investment Risks: TMC is attempting to establish an undersea mining operation, facing high risks and ongoing losses, yet the U.S. government is changing regulations to expedite its progress, highlighting its long-term potential despite immediate challenges.
- Acquisition-Driven Growth: USA Rare Earth has rapidly built a rare earth processing business through acquisitions, and while its proposed mine won't be operational until 2028, a deal to acquire a Brazilian mine expected to close in late 2026 will create a complete rare earth business chain.
- Profitability Comparison: MP Materials operates a rare earth mine and processing facilities, achieving positive earnings on an adjusted basis, making it the most developed company among the three, and has attracted U.S. government funding, showcasing its competitive advantage in the market.
See More
Analysis of Investment Opportunities in Rare Earth Metals
- Current Market Situation: Rare earth metals primarily come from China, and their importance in electric vehicles and the defense industry means that supply restrictions could severely impact automotive production, particularly in the electric vehicle sector, with far-reaching consequences.
- MP Materials' Leading Development: As a frontrunner in the rare earth metals industry, MP Materials operates a mine in California and has processing capabilities, with an expected adjusted profit in Q1 2026, indicating potential for sustainable profitability.
- Challenges for USA Rare Earth: USA Rare Earth is building a mine in Texas, which will take several years to complete and is currently unprofitable; however, it is aggressively acquiring assets, including an operating mine in South America, showing promising progress.
- High-Risk Profile of The Metals Company: The Metals Company plans to build an undersea mine, facing regulatory approvals and high costs; while it has significant growth potential, it is only suitable for investors with a high-risk tolerance, as it may continue to incur losses in the short term.
See More
Analysis of Investment Opportunities in Rare Earth Metals
- Importance of Rare Earth Metals: Rare earth metals are crucial in various applications, including cellphones and automobiles, particularly in electric vehicle production, where supply constraints could severely impact overall market performance.
- MP Materials' Leading Position: As a frontrunner in the rare earth metals sector, MP Materials operates a mine in California and has processing facilities, with expectations of achieving adjusted profitability in Q1 2026, indicating potential for sustainable profits.
- USA Rare Earth Development Challenges: USA Rare Earth is building a mine in Texas, and while its acquisition strategy has bolstered material processing capabilities in the U.S. and Europe, its current lack of profitability may deter conservative investors.
- The Metals Company High-Risk Potential: The Metals Company aims to establish an undersea mine, facing regulatory approvals and high construction costs, presenting significant risks but potentially offering substantial growth opportunities for aggressive investors.
See More
MP Materials Corp. Sues USA Rare Earth Over Technology Theft Allegations
- Lawsuit Background: On June 28, MP Materials Corp. filed a lawsuit against USA Rare Earth, alleging theft of proprietary grain boundary diffusion technology by former engineer Kevin Elkins, seeking at least $5 million in damages, which underscores the company's strong stance on protecting intellectual property.
- Intensifying Competition: MP claims that USA Rare Earth conducted a 'raiding mission' by hiring at least eight key employees, reflecting the escalating competition among companies racing to establish a U.S. rare-earth supply chain, which could reshape the industry landscape.
- USA Rare Earth’s Rebuttal: USA Rare Earth denied the allegations, labeling them as 'baseless,' and argued in a Texas court filing that the technology is 'readily ascertainable via independent development and reverse engineering,' indicating confidence in their technological capabilities.
- Market Outlook: While MP Materials is viewed as a promising investment, analysts suggest that certain AI stocks may offer greater upside potential and lower downside risk, indicating potential challenges for MP's position in investors' minds.
See More
Kazakhstan Project Sparks Political Controversy
- Funding Support: At least 14 companies linked to the Trump and Lutnick families are seeking over $8.9 billion in federal support, raising concerns about potential conflicts of interest due to the substantial funding involved.
- Political Investigation Calls: Democratic lawmakers have called for investigations into investments related to senior officials' family members, emphasizing the need for transparency in government-backed mining initiatives to prioritize national interests over personal gains.
- Mining Agreement Context: The agreement secured by Trump and Lutnick in 2025 grants an American-led venture access to one of the world's largest undeveloped tungsten deposits, with the project eligible for up to $1.6 billion in federal financing, highlighting strategic resource diversification efforts.
- Market Reactions: While stocks of Critical Metals and Energy Fuels edged down, USA Rare Earth and ASP Isotopes saw premarket gains of 1% to 2%, indicating varied market responses to the project amidst ongoing scrutiny.
See More
Opportunities and Risks in Rare Earth Metals Market
- Surging Market Demand: The International Energy Agency forecasts a 50% to 60% increase in demand for rare earth metals by 2040, primarily driven by new technologies like electric vehicles and AI, indicating significant market opportunities for related companies.
- Supply Risk from China: China's control over the majority of rare earth metal supplies was highlighted by a 10x price surge in Japan following export restrictions in 2010, underscoring the strategic importance of these metals and prompting countries to seek alternative sources.
- Divergent Business Developments: The Metals Company is attempting to develop an undersea mining operation and is currently unprofitable, but U.S. regulatory changes may accelerate its progress; meanwhile, USA Rare Earth has quickly built a processing business through acquisitions, with production expected to start in 2028.
- MP Materials' Competitive Edge: MP Materials has established complete mining and processing facilities and is generating positive earnings on an adjusted basis, positioning itself as a leader in the rare earth metals market and attracting investor interest.
See More
Opportunities and Challenges in Rare Earth Metals Market
- Surging Market Demand: The International Energy Agency forecasts a 50% to 60% increase in demand for rare earth metals by 2040, primarily driven by new technologies like electric vehicles and AI, indicating significant market opportunities for companies like TMC, USA Rare Earth, and MP Materials.
- Differing Investment Risks: TMC is attempting to establish an undersea mining operation, facing high risks and ongoing losses, yet the U.S. government is changing regulations to expedite its progress, highlighting its long-term potential despite immediate challenges.
- Acquisition-Driven Growth: USA Rare Earth has rapidly built a rare earth processing business through acquisitions, and while its proposed mine won't be operational until 2028, a deal to acquire a Brazilian mine expected to close in late 2026 will create a complete rare earth business chain.
- Profitability Comparison: MP Materials operates a rare earth mine and processing facilities, achieving positive earnings on an adjusted basis, making it the most developed company among the three, and has attracted U.S. government funding, showcasing its competitive advantage in the market.
See More
