Rare-earth stocks have emerged as standout performers, with the VanEck Rare Earth and Strategic Metals ETF returning over five times that of the S&P 500 since April 2025. Among these, USA Rare Earth (NASDAQ: USAR) has attracted attention despite not being included in the ETF. The company possesses a significant rare-earth deposit in Texas and is positioned to benefit from a $1.6 billion funding package aimed at bolstering U.S. supply chains and reducing reliance on Chinese imports.
The strategic importance of USA Rare Earth is underscored by its rich deposits of terbium and dysprosium, which are currently priced at approximately $4,029 and $930 per kilo, respectively. While the company is still ramping up production and building a magnet factory in Oklahoma, it has garnered around $3.1 billion in funding, reflecting strong investor interest. In contrast, its competitor MP Materials has a more established production footprint, leading to a market cap of about $11 billion compared to USA Rare Earth’s $4 billion.
For market professionals, USA Rare Earth presents a speculative opportunity with a potential upside, given its average price target suggesting a 70% gain from current levels. However, investors should remain cautious, as the company’s success hinges on its ability to translate its rich resources into actual production.
Source: fool.com