Keep an eye on rare earth stocks.
Congress wants to move forward with $1 billion in fuding for the National Defense Stockpile to “acquire strategic and critical minerals currently in shortfall,” as noted by Defenese News. That would more than double the value of the stockpil of essentil rare earths.
One of the companies to watch is Lynas Rare Earths (LYSCF), which just signed a $120 million deal with the U.S. Department of Defense.
“Lynas said the $120mn investment would cover the full cost of plant construction, meaning the company would not have to put up any capital itself. The plant is likely to be built in Texas and be operational by 2025. The company also announced plans to build a light rare earths processing facility in the same location last year,” according to Financial Times.
There’s also MP Materials (MP).
Oversold at support dating back to November 2021, it’s also over-extended on RSI, MACD, and Williams’ %R. From a current price of $32.96, we’d like to see the MP stock rally back to $42.50 again, near-term. Helping, Morgan Stanley just raised its price target to $46 from $42, with MP building a rare earth metal and alloy facility in Texas. It also entered into an agreement with General Motors to supply rare earths for electric vehicles.
Northland analysts also initiated coverage of MP with an outperfom rating, with a price target of $60. The firm called MP, “a very unique and compelling story” that is “uniquely placed to capitalize” on mass EV adoption, growth in wind turbines and a significant supply-demand imbalance for NdPr,”” as noted by TheFly.com.
Or, if you want to invest in an ETF, take a look at the VanEck Rare Earth – Strategic Metals ETF (REMX). It’s also oversold, and could run from $90.36 back to $102.50, near-term. With an expense ratio of 0.53%, some of its top holdings include MP Materials, Ganfeng Lithium, Livent Corp., Lynas Rare Earths, and China Northern Rare Earth Group.
As the U.S. moves forward with rare earth plans, keep these three ideas on radar.
