Why The Metal Company's Stock Is Heading Higher Today

What happened

Rebounding from yesterday's decline, shares of The Metals Company (TMC -3.09%) are soaring this morning. While the company hasn't reported any news to stoke investors' enthusiasm, it seems that the short-lived sell-off yesterday couldn't extend its momentum into today's trading session. Between an analyst's bullish take on the stock earlier this week and newly proposed legislation, investors seem eager to add this deep sea mining stock to their portfolios.

As of 11:51 a.m. ET, shares of The Metals Company are up 12.1%.

So what

Earlier this week, Ashok Kumar, an analyst at ThinkEquity, initiated coverage on shares of The Metals Company. Assigning a buy rating on the stock, Kumar set a $6 price target. Based on the stock's closing price of $2.41 the day before news that ThinkEquity had commenced coverage on The Metals Company, the $6 price target implied an upside of 148%. With shares sinking on Thursday, the bullish outlook on the stock seems even more compelling to growth investors today.

Another factor that's outshining the stock's decline yesterday is news that legislation has been introduced in the House of Representatives that, if passed, would behoove The Metals Company. Republic Representative from Michigan, John James, introduced legislation on Wednesday that seeks to shore up the supply chain of critical minerals -- such as cobalt -- from the Congo. Cobalt is one of several metals, including nickel, copper, and manganese, that The Metals Company aspires to produce from the polymetallic nodules that it collects from the seafloor.

Now what

While The Metals Company stock has caught fire recently, it's critical to recognize the risks that are inherent with an investment in the company. In addition to political and corporate opposition to deep sea mining, there's no evidence that The Metals Company could make its deep sea mining operations a profitable endeavor. Although this is certainly a stock worth watching, it should only remain on the buy lists of those who have a significant tolerance for risk.