Rare earth metals are essential for developing many high-tech and industrial products, and this provides some interesting investment opportunities on the stock market. But what are the best rare earth stocks to buy in 2022? Check out our shortlist to kickstart your research.
Best Rare Earth Stocks To Buy
1. MP Materials Corp (NYSE: MP)
MP Materials Corp is a rare earth venture in Las Vegas, Nevada.
This company is significant because it owns the Mountain Pass Mine in San Bernardino County, California, which is the only operating integrated rare earth mining site and processor in the United States.
In 2019 and 2020, the Mountain Pass Mine produced approximately 15% of the world’s rare earth elements. Financially, MP Materials consistently beats its revenue and earnings per share estimates and sees massive gains in net income.
Something to keep in mind is that there have been some reports that the Biden administration could impose tariffs on Chinese rare earth metals in the future.
As the only rare earth mining and processing operation in the US, this could be hugely beneficial for this rare earth stock peaked in value until it stabilized back to a more reasonable level by around February 2022.
The company will be looking to show strength as it approaches its next earnings release, which is expected to be around the end of February.
MP Materials is off to a great start this year, posting first-quarter 2022 profits late last month. Sales, net profit, and EBITDA all set new quarterly highs for the firm — and that’s just on the balance sheet.
It also recorded a stunning $71 million in operational cash flow, a significant increase above the negative $10 million in free cash flow reported during the same time the previous year.
The US will need access to a supply of rare earth resources regardless of our relationship with China and other countries. This makes MP Materials a potentially smart pick moving forward, which is why it’s on our list of top rare earth stocks.
2. VanEck Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX)
This investment isn’t actually a stock — it’s an exchange-traded fund that contains many of the world’s top rare earth companies. REMX has rare earth companies from China and many other parts of the world.
While it isn’t a rare earth pure play, it could still be an excellent way to put some rare earth exposure into your portfolio. This ETF also contains other metals in very high demand right now, like cobalt and lithium.
There has been a lot of hype among investors about rare earth this year, and this ETF could perform exceptionally well as a result. Because the success of these companies is so heavily affected by global politics, it’s hard to know exactly what will happen.
Most of these ETFs were affected by the ongoing political issues overseas, which pushed back share prices.
VanEck’s Rare Earth experienced a slight dip again, especially with China starting to position itself with Russia against the US and NATO.
This makes the position of VanEck problematic, but rare earth materials companies in China would still need to sell outside the country if it wants to continue being profitable.
3. Materion Corporation (NYSE: MTRN)
Materion Corporation is a USA rare earth company that produces advanced engineering materials. These materials are made from rare earth products and include precious and non-precious metals, alloys, ceramics, inorganic chemicals, and more.
This company is exciting due to its broad range of industries, including defense, semiconductors, auto industry, consumer electronics, energy, and more. Although Materion does not mine for rare earth metals, it serves as an essential middle step in production.
With a very steady stream of business in various industries, it has also pivoted during tricky economic times. Materion has recently acquired a portfolio of electronic materials from leading provider H.C. Starck.
This is particularly helpful right now, as Materion can sell these materials to semiconductor manufacturers. The world is still expecting a shortage of semiconductors due to high demand and supply chain issues.
With a relatively small amount of debt, Materion could be set up financially for the future.
4. Neo Performance Materials (OTC: NOPMF)
Neo Performance Materials is a global venture based in Toronto, Canada. The manufacturer has a rare earths processing facility in Estonia with manufacturing facilities in countries around the world.
This diversity has allowed Neo to have a huge portfolio of innovative products and technology. It is mainly well known for its magnets and magnetic powders, making a wide range of rare element resources and chemical products.
Thanks to this sizable portfolio of products, the company has exposure to an extensive array of industries. Neo’s most recent earnings report was solid, with record revenues, earnings per share, and net income.
Revenue was up over 27.1% by $166.3 million, year over year, and Neo maintained a significant cash reserve of over $61.1 million. Plus, operating income was $28.7 million in the quarter, higher by 74.8% YoY.
Overall, this paints a very positive picture for investors, and the company is well-poised to capitalize on the growth of the rare earths market.
5. Iluka Resources (OTCMKTS: ILKAF)
Iluka is a leading international mineral sands company involved in exploration, development, mining, processing, marketing, and rehabilitation.
It has been in the zircon industry for over 60 years and is a leading global producer of zircon and titanium dioxide feedstocks, rutile, and synthetic rutile. Furthermore, Iluka is developing its rare earth elements portfolio.
The company has operations in Australia, Sierra Leone, and Sri Lanka as well as a global marketing and distribution network. Iluka is having a solid year, with a record-breaking 2021 after a sharp slump in October 2020.
This rare earths stock had a considerable 10% jump from 2022, and we could see this momentum continue throughout the year.
The fact that EBIT margins have grown from 20% to 34% with increasing revenue gives Iluka Resources stockholders reason to be optimistic. In our opinion, checking those two boxes indicates progress.
Is Rare Earth a Good Investment?
Rare earths could be a great investment, as this is a relatively stable industry with long-term applications. Most companies in the field are in China and the US, with a sufficient supply for the world’s demand.
The electric car industry is taking off, as consumers are looking for eco-friendly transportation options. Since electric vehicles require rare earth elements for production, these companies could benefit heavily from the increased demand for these cars.
Rare earths are also used in various other essential items, ranging from personal electronics to defense systems. Even windmills use rare earth metals.
Also, having multiple revenue streams can somewhat insulate these companies from the ups and downs of the market, which could make them a better long-term investment.
There are also plenty of solid rare earth penny stocks to invest in, including some of the picks on our list.
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If you want to invest in the growing electric vehicle industry but aren’t quite ready to buy into risky startup manufacturers, buying rare earth mineral stocks could be a good option instead.
Many of these companies already have their feet on the ground and products out the door.
Since rare earth metals are part of so many essential products right now, demand could continue to rise to new heights.
That said, you should perform your own due diligence before picking up any stocks, including the ones on our list.
Rare Earth Stocks FAQ
What Are Rare Earth Stocks?
Rare earth stocks are stocks for companies that mine, process, and sell rare earth minerals.
This also includes supporting services, such as:
- Rare earth exports
- Rare earth supply chain
- Rare earth reserves
- And more
Their materials are commonly used for tech products and other renewables. Some companies also mine or refine critical minerals outside of rare earths, which means you don’t need to invest in a pure play to get in the door.
Who Owns Most Rare Earth Minerals?
It is estimated that China mines about 70% of the world’s rare earth minerals while also carrying out 90% of the complex process of converting them into magnets. According to a recent White House report, China controls 55% of the world’s rare-earth mining and 85% of the world’s refining industries.
What Countries Have Rare Earth Minerals Outside Of China?
The United States and Australia all have rare earth minerals, and prominent companies here include MP Materials and Lynas Rare Earths. While other countries have limited amounts, China still holds the most considerable bulk of mineable rare earth minerals, including molybdenum and lithium.
What Is The Best Rare Earth Stock?
Our top pick for the best stock to watch out for is MP Materials. It is the biggest provider of rare earth minerals outside China, giving them consistent value as a go-to resource. Also, its stock trades on the NYSE, which is good for US investors.