Forget MP Materials: This Rare Earth Stock Is Up 21% in 2025 With More Upside Ahead

Since the start of the year, MP Materials ( MP +0.61%) stock price has rallied by nearly 250%. This far outperformed the S&P 500 index , which is up by around 17% during the same time frame. Yet while shares in this rare earth metals company delivered such strong outperformance this year, it doesn't mean the same thing will happen in 2026. NYSE: MP Key Data Points While geopolitical factors suggest further favorable times ahead for U.S.-based rare-earth metals companies, MP Materials may no longer be the best way to capitalize on the trend. Rather, it may be shares in one of MP Materials' smaller competitors that offer an even greater path to upside over the next 12 months. Image source: Getty Images. MP Materials could deliver far less stellar gains in 2026 MP Materials' stock price may be up well over threefold this year, but in recent months, the stock has experienced sideways price action. Blame this largely on the temporary easing of trade tensions between the U.S. and China. Before this, China had threatened to restrict rare-earth metal exports to the U.S., which served as yet another boon for rare-earth metal stocks. As you may already know, the vast majority of these materials, which are essential for the manufacture of electronics, electric vehicles, and other technologically advanced items, come from China. To reduce the power of this bargaining chip, the United States is making tremendous efforts to boost the mining and refinement of such materials by companies located either stateside or in allied countries. Yes, next November, the "temporary truce" comes to an end. This means concerns about rare-earth metal supply could resurface, potentially boosting the value of MP Materials and its competitors. However, in the meantime, shares could continue to pull back. That's mostly because it's been future potential, not current results, that have driven most of this stock's turbo-charged rally. Moreover, as the company has already formed a public-private partnership with the U.S. Department of Defense (DoD), it's unlikely that this development could serve as a catalyst for share price growth again. For another rare earth metals company, on the other hand, the story is entirely different. For USA Rare Earth, it may play out far differently With the U.S. fast-tracking the development of non-Chinese rare earth metals, this company stands to make significant progress with its rare earth metal projects. Currently, MP Materials trades at a forward price-to-earnings, or forward P/E , of around 59. As sell-side analyst estimates likely include the impact of the DoD partnership with the company, one can argue that shares fully reflect this factor at current prices. In the coming year, rather than surge, we could see MP Materials merely "grow into its valuation," producing far less stellar gains for investors. Now, let's contrast that with USA Rare Earth ( USAR +2.98%). Yes, USA Rare Earth currently trades at an even richer valuation than MP Materials, given its status as a pre-revenue company. Rallying by just 25% this year, while...

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