| Price | Buy Range | Loss Limit |
| 45 | 43-45.5 | 37.5-38.5 |
Why the Strength?
Critical to the progress of electrification and “green” technology trends are rare earth minerals, which help power technologies like EVs, wind turbines, robots and drones. MP Materials operates the largest rare earth mineral mine in the Western Hemisphere, currently accounting for around 15% of total global supply, with a focus on Neodymium-Praseodymium (NdPr)—a crucial input used for making rare earth magnets, which in turn are used in many of the aforementioned devices. MP opened Wall Street’s eyes to the oft-overlooked industry in Q3, boasting estimate-beating revenue that soared 143% from a year ago and 36% sequentially, prompting at least two major institutions to recommend the company (a reason for the stock’s strength). Earnings of 27 cents per share, meanwhile, beat estimates by 10 cents (up from a loss a year ago) as, despite logistical and labor challenges related to Covid, rare earth oxide shipments increased 30% from the prior quarter while realized NdPr prices grew 5%. Management also reported generating a “significant” amount of cash from operations, which will be used to advance its Stage II and Stage III plans to restore the full rare earth supply chain to the U.S. (Most of the rare earth concentrates MP produces are sold to China through an intermediary, but its plans will allow it to bypass the middleman and fully process and sell NdPr straight to end users.) MP Materials further boasts a strong balance sheet with cash and equivalents of $1.2 billion, and the company sees continued “rising demand for rare earth materials globally” going forward. There are a few moving parts here, but analysts see continued sales and earnings growth into next year.
Technical Analysis
MP broke out last November and ran up to 52 by March, then had its first major correction as shares fell to 23 in May. What followed was five more months of zig-zagging until the bullish Q3 report allowed MP to move to multi-month highs. There’s still overhead to chew through, but we like the recent tight trading action—if you’re game, you can start small here.
| Market Cap | $7.80B | EPS $ Annual (Dec) | |
| Forward P/E | 53 | FY 2019 | -0.20 |
| Current P/E | 56 | FY 2020 | 0.17 |
| Annual Revenue | $275M | FY 2021e | 0.70 |
| Profit Margin | 52.1% | FY 2022e | 0.83 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) |
| Latest qtr | 99.8 | 143% | 0.27 | N/A |
| One qtr ago | 73.1 | 141% | 0.17 | 31% |
| Two qtrs ago | 60 | 189% | 0.13 | 86% |
| Three qtrs ago | 42.2 | 100% | 0.18 | 260% |
