The United States is one of the few nations that has energy independence and commodity independence from the rest of the world. There are of course some gaps, and even in the tariff-adjusted business climate the U.S. still has to depend on foreign trade for many of the nation’s prized industries. One such gap within critical commodities is the “rare earth” materials that are required for defense, electronics, lasers, magnets, automotive, batteries and many other products and industries.
Despite ongoing efforts to open new sources and processes for rare earth materials, China is still the global axe for rare earth materials with an overwhelming majority at the present time. China actually controls an estimated 85% of the global processing capacity for rare earth materials. This will not be easy to change, but there is no reason that the United States cannot do a better job in gaining its own “rare earths independence” with bold and rapid efforts.
Rare earths pose a unique opportunity for investors looking to capitalize on what is undoubtedly a secular trend. Many of the go-to rare earth stocks are already up massively in 2025. Now it’s time to determine how much more potential upside is there for the investors — and it’s time for those same investors to assess the risks in this sector.
Rare earth elements are listed as neodymium, cerium, lanthanum, promethium, samarium, terbium, praseodymium and a whole host of other metals and materials ending in “ium” that most of us know little or nothing about.
Magnets account for roughly 40% of all rare earth related demand. One misnomer for being “rare” is that these materials are not always hard to find. The trick is that they are hard to find in concentrated deposits which are economically viable to acquire and operate.
So what happens when the nation’s strongest economic adversary, with an effective lock on this critical market, is able to ration and control the supply of such critical materials? China has proven to be able and willing to use its control of the rare earths for well over a decade via export quotas and prices.
Tactical Bulls is evaluating the domestic and friendly-nation opportunities for investors. Many of the companies involved in rare earths are about as “unheard of” as some of the “ium” metals and materials counted in the rare earths. And many of the companies are either considered to be penny stocks with unproven business models and no significant history of production. And most investors need to know up front that evaluating earnings and traditional valuation metrics is going to be a more of a “dark art” than market science.
The good news is that there are some U.S. and Western companies that are already established players in rare earths. And there are other public stocks that are in nations not under China’s direct sphere of influence.
MP Materials Corp. (NYSE: MP) is the domestic leader for rare earths. The U.S. Department of Defense became MP’s largest shareholder this summer after investing $400 million in preferred stock of the company. While the initial jump was more than 50% to $45.00 at the time, look now — MP Materials’ stock was most recently at $73, with year-to-date gains of more than 300%.
Perhaps the biggest question ahead is whether there is any room left for investors. The market cap is still quite small at $13 billion, but MP Materials had scant revenues of barely $200 million for all of 2024.
BofA Securities has a Buy rating and a $78 price objective, based on 25-times expected EBITDA for 2029. Jefferies upgraded MP Material from Hold to Buy with a $80 price target at the start of August. Morgan Stanley issued a Equal-Weight rating and $65 target at the end of July. And D.A. Davidson recently reiterated its Buy rating and raised its price target to $82 from $32.
Canaccord Genuity has a Buy rating on MP Materials. The firm referred to the U.S. DoD stake as “absolutely brilliant” in referring to how the U.S. can break China’s “mercantilist policies” in using rare earths for international trade and leverage.
While the latest quarterly results were the source of some research reports, one sentence in BofA’s report should sum u how MP Materials is viewd:
We see MP as an unmatched vehicle for exposure to growing rare earth magnet demand.
CFRA (S&P) also has a Buy rating and it most recently raised its price target to $90 from $88 in the call. One key summary that investors will want to know:
Our 5-STARS (Strong Buy) opinion reflects MP’s competitive advantage supplying NdPr to North America for electric motors, wind turbines, and robotics. The DoD partnership transforms MP from cyclical miner to strategically protected asset with guaranteed cash flows via $110/kg price floor and 100% offtake commitment. Strategic partnerships with Apple and GM validate downstream integration, positioning MP as strategic partner rather than commodity supplier.
Are there other “rare earth” leaders that investors can consider? There are, and they are riskier because they do not come with an implied guaranteed floor of revenues.
Ramaco Resources,Inc. (NASDAQ: METC) is a met-coal play in southern West Virginia and in southwestern Virginia. It also has one coal mine and rare earth development center near Sheridan, Wyoming that is dtill in its initial stages of production. Ramaco announced in Septermber/2025 that a major deposit of primary magnetic rare earths and other critical minerals was discovered at its mine near Sheridan, Wyoming.
Ramaco’s market cap is $1.85 billion and its revenue from met-coal was $626 million in 2024. There is only one estimate ahead, but Ramaco is expected to see $581 million in sales in 2025 and then up to $781 million in 2026. Its shares trade close to $30 and they had already risen some 200% YTD in 2025.
One company that may be able to offer an alternative to MP is none other than USA Rare Earth Inc. (NASDAQ: USAR). This player is up about 30% so far in 2025 with a $1.5+ billion market cap. The one major issue is that it effectively has no revenues prior to 2025, has no real revenues now, and the two firms that follow it with ratings expect revenues to be only about $46 million in 2026.
USA Rare Earths is building one of the largest rare earth magnet manufacturing facilities in the United States to service multiple industries and capabilities. It has have offtake agreements in place with partners in the United States and South Korea. The company has its Round Top deposit in West Texas that is said to hold 15 of the 17 rare earth elements and it intends to use the ore processed from this deposit in its magnet facility in Oklahoma.
Sociedad Química y Minera de Chile S.A. (NYSE: SQM) is based in Chile, it has a long operating history, and it has a U.S. market cap of about $12 billion. And while it’s up about 20% at $43.50 in 2025, this was a $100+ stock in 2022 before lithium stocks hit the skids. While very diversified, iodine, fertilizers and lithium are key areas that investors focus on here. The company has nearly 100 years of operating and it touches too many industries as a supplier of mined and processed materials to mention. BMO has a $55 price target, BBA has a $55 target and BofA has a $43.50 price objective.
Lynas Rare Earths is in Australian-traded rare earths player valued at closer to 13 times EBITDA now that its stock has doubled in 2025. Lynas does not have guaranteed revenues, but it has the Mount Weld mine in Australia and it is in the process of increasing its refining capacity in Malaysia. Lynas has just recently completed a A$750 million capital raise in a dilutive equity offering. The company also reported full-year net income of A$7.99 million versus A$84.51 million the prior year.
The VanEck Rare Earth and Strategic Metals ETF (NYSEArca: REMX) is a way for investors to take a diversified approach to investing in rare earths without gambling on the fate of a single speculative company. It has $782 million in assets and was last seen up 57% year-to-date. While this ETF’s investment policy targets companies which derive at least 50% of total revenues from the rare earth/strategic metals industry, investors should take note that VanEck allows A-shares issued by Shanghai-listed companies. This means that investors are getting exposure to China’s public rare earths companies at the same time that investors are looking for ways to become “China-free” in their rare earth ambitions.
There are many other companies which are targeting rare earth materials as well. Some of the companies have little to no real operating histories, and many are listed as penny stocks with either thin trading volume or very low market valuations.