USA Rare Earth (USAR 6.33%) is a mining company that's part of a larger strategy in the U.S. to build a domestic rare-earth supply chain.
The company controls a big mountain in Texas -- Round Top -- that's full of rare-earth metals that can make powerful magnets used in electric vehicles (EVs), electronics, clean energy technology, and defense systems. Right now, China manufactures most of these high-performance magnets, which underscores the urgency in developing a home-grown source for the U.S.
Indeed, the Trump administration plans to take a 10% stake in USA Rare Earth. This will be through a $1.6 billion deal aimed at backing its rare-earth mine in Texas and a separate magnet manufacturing facility in Oklahoma.
USA Rare Earth is currently beating the market by a wide margin. It's up about 62% on the year, while the S&P 500 has gained about 1.7% so far.
NASDAQ: USAR
Key Data Points
Getting help from the U.S. government is no small matter, yet the stock is far from stable. And whether the mining stock is a buy right now will depend entirely on how much risk you're willing to take -- and how much you believe in the narrative pushing USA Rare Earth toward large-cap territory.
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The case for USA Rare Earth -- and the case against it
The macro trend that's driving USA Rare Earth's opportunity right now is the surging demand for permanent magnets. These magnets can generate a magnetic field without external power, which makes them critical components across a wide range of applications, from EV motors to wind turbines and missiles.
The strongest type of this magnet -- neodymium-iron-boron, or NdFeB -- is made from rare-earth metals that can be found in the Round Top Mountain in Texas. Indeed, at least 15 of 17 rare-earth elements can be found there, including significant reserves of lithium and other critical minerals.
Uniquely, the Round Top deposit contains heavy rare-earth metals, like dysprosium (Dy) and terbium (Tb), which are rarely found in the U.S.
To put the opportunity plainly, any secular growth in electronics and automation -- including artificial intelligence and robotics -- and green technology will create a strong tailwind for magnet manufacturing companies like USA Rare Earth. On the contrary, any major technological changes in these sectors -- like an EV motor that uses fewer or no rare-earths metals -- could spell disaster.
The company also has to contend with China, which could opt to flood the market with rare-earth metals to make USA Rare Earth's product seem expensive by comparison.
Right now, USA Rare Earth is pre-revenue. It's already secured about $3.1 billion in funding in 2026, including $1.6 billion from the U.S. government. It's targeting 2028 for commercial production at Round Top, while its magnet facility could be finished as early as the first quarter of this year.
The stock, as such, is best suited for those with a high risk tolerance. At this point, USA Rare Earth's upside is tied to continued policy support and nearly frictionless execution. Investors who believe that today's push for a domestic rare-earth supply chain will extend five or 10 years in the future may find the stock a compelling buy today.
