TMC The Metals Company (TMC 1.64%) is a deep-sea mining specialist aiming to become a major mineral-sourcing player. The company went public through a merger with a special purpose acquisition company (SPAC) in 2021 and has seen volatile trading since its public debut.
Since hitting the market, the company's share price is actually down 15.5%. On the other hand, the stock has been on a massive rally over the last year. The business is still in a pre-revenue state, and it's conducting tests and pursuing regulatory and licensing approvals needed to begin commercial operations. Despite not posting any revenue, investors have been piling into the stock in response to some major geopolitical developments.
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The U.S. relies on China for mineral sourcing and is particularly dependent on the country for rare-earth minerals. The dynamic presents substantial economic and national security fault lines -- particularly as relations between the two countries have continued to become increasingly adversarial.
While TMC's business strategy has primarily centered around collecting nodules that contain base minerals, investors have ramped up bets that the company could move into the rare-earth minerals category. As of this writing, TMC stock is up 627% over the last year of trading and has a market capitalization of $3.3 billion.
NASDAQ: TMC
Key Data Points
This stock stands out as a great way to play mining trends
While TMC stock could go on to be a big winner over the long term, I think there's another company with exposure to the deep-sea mining space that looks like a better buy right now. Kraken Robotics (KRKN.F 1.77%) doesn't actually operate in the mining space directly, but it provides technologies that could play key roles in allowing the U.S. and its allies to reduce their reliance on Chinese mineral sourcing.
OTC: KRKN.F
Key Data Points
Kraken is a Canada-based designer and manufacturer of deep-sea battery systems and synthetic aperture sonar (SAS). The company's battery tech allows uncrewed underwater vehicles (UUVs) to function at depths of up to 6,000 meters (19,600 feet) and to operate for longer than competing technologies. Meanwhile, its SAS tech allows for the detailed mapping of sea floors and objects. UUVs are poised to play a rising role in deep-sea mining, and the demand outlook for the technologies Kraken provides for the category looks promising.
In addition to applications for mining, Kraken's tech is also seeing adoption in UUVs used for defense purposes. With geopolitical tensions on the rise, undersea drones are becoming an increasingly important tech category. Kraken already has a partnership with Anduril, a leading player in next-gen defense technologies, and has won contracts with the Royal Canadian Navy. It's also been frequently demoing its tech for other North Atlantic Treaty Organization (NATO) members.
In the third quarter, Kraken's revenue surged 60% year over year to reach 31.3 million Canadian dollars. Meanwhile, the business posted a gross margin of 59% and a net income margin of 10.5%. With a huge runway for long-term expansion and the business already posting profits, I think Kraken stands out as a better buy than TMC right now.
