New Ramaco Resources Price Target as Rare Earth Stocks Get Smoked

Earlier this week, I increased my target price for Lithium Americas  (LAC)  to $12 from $9.50 as that target had been reached in response to a news event. 

Recall that the firm had reached an agreement in principle with the Department of Energy to receive the first draw of $435 million on a previously announced $2.26 billion loan that had been secured during the Biden administration. As part of this deal, the Department of Energy will end up taking on a 5% equity stake in the company through warrants to buy common stock at an exercise price of $0.01 per share.

The Department of Energy will also receive a 5% economic stake in the Thacker Pass project through warrants that also bear an exercise price of $0.01. Thacker Pass in Nevada is the world's largest known measured lithium resource and reserve. The DOE has also agreed to defer $182 million worth of debt servicing costs for the firm over the first five years of the loan.

Well, good thing we always give our long positions a haircut at target prices, because the stock has been smoked since we wrote that piece on Tuesday. LAC is currently trading at my "add" level, which I had placed at the stock's 21-day EMA at that time.

The Chart​

Readers will see that the 21-day EMA has been pierced to the downside. ​Remember that labels are not lost until contact is lost. Piercings are not quite as important as where contact with a specific technical level is or isn't maintained. I added to this long late on Thursday as the level was approached and I intend to add further if the shares are still trading here after publication.

Lithium Americas (LAC)

Target Price: $12.00 (unchanged)

Pivot: $9.50

Add: Down to the 21-day EMA (currently $7.01)

Panic: Loss of 50-day SMA (currently $3.30)

Meanwhile...

Ramaco Resources (METC) is also getting smoked. The stock blew through our top trendline pivot (then $41) and exceeded our $49 target price this week, only to get punched in the nose. Again, this is why we haircuts at targets. However, here, I am not yet adding. Take a look... ​

​Here, I am also waiting for the stock to approach its 21-day EMA, which has moved up to what was our old pivot. All of the indicators are still technically healthy in this name.

Ramaco Resources (METC)

Target Price: $58 (recent high)

Pivot: $49 (upper trendline, old target) 

Add: Down to the 21-day EMA (currently 41)

Panic: Loss of 50-day SMA (currently $31)

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