How to Buy MP Materials, the Hottest Rare Earth Stock, as U.S.-China Tensions Escalate

Rare earth elements have caught the attention of investors everywhere. Discovered in mineral deposits in the late 18th century, these elements have unique magnetic and luminescent properties.

Rare earth elements enable the functionality of robotics, defense systems, EVs and medical devices, such as MRIs. However, their extraction and separation from other elements can be difficult.

China is the world’s largest provider of rare earth elements. Last week’s tensions between the U.S. and China involved export controls on rare earths, along with the threat of retaliatory tariffs by the U.S. 

MP Materials Stands Out

While China dominates this field, the U.S. is looking to fortify its position in the rare earths markets. The current rally in rare earth stocks has placed the spotlight on one company in particular, MP Materials Corp (MP) .

Las Vegas, Nevada-based MP Materials climbed 21% on Monday. As of Monday’s close, the stock had gained a whopping 480% year to date.

MP owns the Mountain Pass Rare Earth Mine and Processing Facility in California, located about 50 miles southwest of Las Vegas. That mine is responsible for about 15% of the world’s rare earth production, and is the only mine and facility of its kind in the U.S.

MP Materials blasted out of a consolidation pattern (shaded yellow) on heavy volume (arrow) on Monday. Aggressive traders will jump in at the current price, and risk buying at the highs, while conservative investors will hope for a pullback to the stock’s breakout point, located in the low $80s.

I’m combining those strategies, by entering a half-sized position at current levels. I’ll add the other half if MP Materials pulls back to its breakout point. Based on its current price, this would give me a cost basis between $85 and $90.

Strategic Importance

Due to MP Materials’ strategic importance, the U.S. Department of Defense took a 15% stake in the company in July of this year, making it the company’s largest shareholder.

MP Materials and other rare earth stocks are hot right now, but investors beware — high volatility can occur in both directions. Investors and traders who are looking to buy MP on a pullback risk missing their entry points. On the other hand, if prices do fall, the descent could be rapid.

MP Materials is scheduled to report earnings on October 30. 

At the time of publication, Ponsi was long MP.