Rare earth stocks are drawing more investor interest with each passing day. Savvy investors are well aware of the fact that rare earth metals and other materials are necessary to create the magnets used in electric vehicles, the diminutive components used in video game consoles and other devices. This is precisely why the rare earth metal market has somewhat paralleled the rise of the electric vehicle market.
If everything goes as planned, the rare earth elements market will enjoy a CAGR of more than 10% all the way up until 2025. In fact, Brand Essence Research projects the market will exceed $20 billion within the next half-decade. Let’s take a look at some of the top rare earth stocks for the year ahead.
MP Materials Corp. (NYSE: MP) produces rare earth materials in the Western Hemisphere. The company’s Mountain Pass site is the heart of its operations. In fact, MP is the largest producer of rare earths materials in the Western Hemisphere. MP’s earnings results reveal the company is excelling in terms of operational execution. MP’s balance sheet is equitized, setting the stage for the company’s long-term plans to come to fruition.
MP executives have made it clear the upcoming quarters will be centered on shifting downstream to ramp up production of rare earth materials with particularly high margins such as Praseodymium, also known as NdPr. The goal is to reach and maintain profitable growth after focusing on this rare earth concentrate.
MP will continue to benefit from the United States government’s decision to form a highly strategic critical metals reserve. However, it is interesting to note MP is sending production to China. It is also interesting to note MP has an elevated forward P/E ratio of 170.50. MP appears to be a solid long-term investment that will generate significant interest from those looking to profit from rare earth metals that are not sourced from China. As long as the electric vehicles market takes off as expected, MP should fulfill its potential.
Though Denison Mines Corp. (NYSE American: DNN) is priced a little over a dollar, it is worthy of your analysis as an investor. This uranium stock helps nuclear reactors generate electricity. Though nuclear power has somewhat of a negative reputation following Japan’s Fukushima incident, it is a reliable source of power. Nuclear power does not generate any type of greenhouse gas, meaning it is a comparably clean source of power.
Though Denison is losing money at the current moment, its stock sale proceeds are helping to improve its development efforts. The risk is that the company’s plans will work out as anticipated, ultimately justifying the stock’s meteoric rise since late January and also propelling it to even greater heights.
Tronox Holdings plc (NYSE: TROX), currently priced at $19.76, is trading less than $2 away from its 52-week high of $21.36. The stock has a forward P/E ratio of 13.66, meaning it is likely slightly underpriced at its current trading level.
The top analysts have established an average price target of $22.20 for Tronox, indicating it has the potential to pop by more than 12%. Of the five analysts who have studied Tronox in-depth, four recommend it as a “buy” and one considers it a “hold.”
Energy Fuels, Inc. (NYSE American: UUUU) is currently trading at $5.18, a dollar below its 52-week high of $6.45. Energy Fuels has accomplished the near impossible feat of transforming its operations within less than a year, pivoting to the rare earth segment in a mere nine months. Energy Fuels creates a rare earth concentrate derived from monazite ore from the United States. This production mandates relatively minor processing alterations that requires minimal capital investment. In fact, the company’s first rare earth product is being made right now in the first quarter of 2021.
The company has enlisted the assistance of several of the top rare earth industry gurus with a wide variety of expertise, such as Jack Lifton, to provide insight and advice as to how to maximize operational efficiency. Energy Fuels has contracts with groups ranging from Penn State University to Neo Performance Materials and even the United States Department of Energy to recover rare earth materials from coal. If UUUU CEO Mark Chalmers has his way, the company will amass a reserve of more than three dozen critical materials in the near future, setting the stage for the company to reach new heights in the months and years ahead.
Disclosure: No positions