Mining stocks aren't usually growth stocks, or at least don't often experience the kind of explosive gains you see in fast-growing tech start-ups.
And yet for rare earth metal miner MP Materials (MP 5.58%), a triple-digit gain in the last year has turned it into one of the market's darlings.
NYSE: MP
Key Data Points
Of course, MP isn't like other mining stocks. In fact, it sits on one of the only scalable rare earth metal mines in the U.S., the Mountain Pass mine in California.
In a world where China dominates the rare earth metals market, that mining asset has put MP not only at the heart of the U.S.'s efforts to rebuild its domestic supply chain but also on the radar of forward-looking investors.
Why MP looks like a smart mining stock to buy
MP Materials' appeal starts with its geography.
Image source: MP Materials.
Mountain Pass is the only large-scale rare earth mine and processing facility currently operating in the U.S. The ore that MP extracts is rich in key rare earth elements like neodymium and praseodymium. Both elements are critical in making high-performance magnets, which are themselves found in everything from fighter jets to EV motors.
To highlight the opportunity, one recent study projects that the Nd-Pr oxide market could grow 11-fold by 2035, mainly because of its use in permanent magnets.
MP's appeal, however, goes beyond diggers and ore. In addition to mining, the company is also producing these high-performance magnets itself.
Already, MP has garnered support from some big players, not the least of which is the Department of Defense (DOD). In July, the DOD became MP's biggest shareholder with the signing of a $400 million deal. A few weeks later, MP signed a supply agreement with Apple (AAPL +0.09%) worth $500 million.
That said, the stock's magnificent run and rich valuation leave little room for error. But for investors who can stomach volatility, early exposure to this rare earths miner could be worth a small, speculative play.
