via WSB:
Long time lurker, first time poster. Feel free to call me regarded.
$USAR and $MP are companies backed by the US govt with plants in production or just starting production.
$MP is the only publicly traded US stock that manufactures permanent magnets. Permanent magnets are used in complex avionics systems, robotics, EV Powertrains, i.e. they have a lot of fucking use cases. They have deals with Apple and the DoW, too. This is the safer bet.
$USAR is the only publicly traded US stock to mine, and refine heavy rare earth minerals (with mining sites in the US. CRML is based in the US but has plants in Greenland). This stock is a little more speculative since they haven’t started ramping production up yet, but they expect to do so soon. The US Govt has a 1.6B stake in USAR, around 10-15% of the company.
This trade isn’t about rare earth minerals entirely, it’s moreso a bet against long term friendly US-China relations. The recent Chinese export ban targeting these two companies only makes it more important to the US Govt to get a domestic Rare Earth supply chain up and running ASAP.
A similar argument was used for INTC bulls right around when the CHIPS Act was passed. The US Govt is starting to realize that, if/when China decides to take over Taiwan, be it diplomatically or militarily, the US will have to respond accordingly. This means China will no longer be a friendly rival, or a trading partner. This was his goal with the tariffs, the Iran War, and the trade wars. To get companies to come to the US, to build factories here, to decrease reliance abroad (especially in China). The Rare Earth trade is just another facet of this, and it hasn’t been played out yet.
There’s a lot of noise around these two stocks, mainly because the recent Chinese export ban news. I think it’s a good idea to buy and hold these for the next few years. They’re relatively undervalued, especially after the recent dip and they have a very asymmetric upside.
My positions:
250 shares MP with a ~$50 cost basis
500 shares USAR with a $18 cost basis
I will continue to DCA into USAR as it remains under $20 a share, and add some MP shares to round out this play.