New Price Target and Plan for This Rare Earths Play

Is Ramaco Resources (METC) on the run?

Well not exactly, but five straight green candle sessions are indeed five straight green candle sessions. This is a "Stocks Under $10" name that I had gotten involved with earlier this year after learning of the company's collaborative efforts with the U.S. Department of Energy and its sustained communications with both the Department of Defense (War) and Department of the Interior. There has also been a grant from the Wyoming Energy Authority.

Clearly, there is great interest in the success of a U.S.-based (Kentucky) company with operations in West Virginia, Virginia, Pennsylvania and Wyoming that develops metallurgical coal for steelmaking, while also mining for and developing rare-earth elements. The Brook Mine in Wyoming is considered to have world-class deposits of rare earths and critical minerals co-mingled with coal. The Brook Mine is the first new rare-earth element mine in the United States in 70 years. Goldman Sachs (GS) has joined the project as the structuring agent.

Tuesday Announcements

Ramaco and Mulberry Industries announced that the two firms had entered into a non-binding memorandum of understanding to negotiate an offtake partnership meant to bolster domestic rare earth and magnet supply chains. Mulberry will, as part of this deal, manufacture the magnets at its facilities in Georgia for U.S. defense, aerospace, automotive and robotics clientele.

Ramaco also announced that its Board of Directors had authorized a share-repurchase plan of up to $100 million over a period of up to 24 months.

Out of Touch

Looking back over my recent to less-than-recent articles, I see that I have not kept readers up on my long position in METC. That was neither by accident nor by design. I write articles and when writing articles, I must prioritize as I cannot write articles all day long at the expense of my day job. I do not run an all-day blog with the exception of the days that I fill in for Doug Kass at his Daily Diary.

Going back, I see that on October 31 (Halloween), I let readers know that I was downsizing my long in METC and re-allocating those funds into Lithium Americas (LAC) . The stock traded between $29 and $35 that day.

On November 3, I re-informed that I was continuing with that rotation but leaving a long position in both names. On December 5, I touched base just to let readers know that I had maintained that position at a smaller size. Nothing since.

The New Plan

The last price target I gave you was up in the low $40's, so let's begin anew, shall we? The sales made earlier were good sales, though LAC has not yet made us look smart. Our remaining position, even omitting the profits from our earlier sales, is still up 4% even factoring for purchases made at higher prices and recording trades in a FIFO fashion. Earnings are not due until March.

OK, the spike and selloff are apparently over. METC has developed a double bottom pattern of bullish reversal this November/December with a $19 pivot. The stock is also closing in on its 200-day simple moving average (SMA), which is running alongside that pivot. That test will be crucial.

Relative Strength has improved this month and is nearing what would be considered to be a neutral reading. The daily moving average convergence divergence (MACD) has also improved greatly. The histogram of the 9-day exponential moving average (EMA) has moved into positive territory and held that move for three weeks. That's a short-term positive signal.

Additionally, the stock's 12-day EMA has moved above its 26-day EMA. That's also bullish. However, some caution needs to be shown. Both of those lines remain in negative territory. That weakens the signal. Should those lines move into positive territory with the 12-day line still running above the 26-day line, that would be a much stronger medium-term bullish sign.

Price Target: $24

Pivot: $19

Add: down to $15 (recent low)

Panic: Loss of that recent low

At the time of publication, Guilfoyle was long METC, LAC equity.