Is USA Rare Earth the Smartest Investment You Can Make Today? | The Motley Fool

Wall Street is a voting machine in the short term and a weighing machine over the long term, and emotions can lead investors to make questionable choices on a day-to-day basis. That's the backstory that you need to keep in mind if you are considering buying USA Rare Earth ( USAR +2.98%). Here's why this company's story is so exciting and why the smartest move could still be to watch this stock from the sidelines (or to buy one of its peers). What does USA Rare Earth do? USA Rare Earth's name is intended to convey a great deal about its business. The company's primary goal is to mine for and process rare-earth metals with a focus on U.S. production. These metals are used in everything from smartwatches to missile defense systems. Without rare-earth metals, the modern world wouldn't be possible. Image source: Getty Images. Most rare-earth metals are sourced today from China. That has always been a supply chain issue, but the problem has come to the fore thanks to the tariff negotiations that have been taking place around the world. Rare-earth metals are one of China's biggest negotiating chips, and it has made it clear that it will limit access to these products to gain the upper hand. That's not surprising at all. In fact, it is likely a good decision from a bargaining perspective. However, it has prompted other countries to seek alternative suppliers of rare-earth metals. In July, MP Materials ( MP +0.61%) announced that the U.S. government was making a big investment in the company to support its expansion efforts. That was followed up by a partnership with Apple and a stock offering, with the total capital raised summing to roughly $1.5 billion. NASDAQ: USAR Key Data Points Like USA Rare Earth, MP Materials is aiming to establish a business centered on the mining and processing of rare-earth metals. Only, MP Materials appears to be a bit further along in the process. The problem with USA Rare Earth That said, both stocks have been shockingly volatile in 2025, largely due to news flow. USA Rare Earth's stock rose more than 230% at one point, but then tumbled. It is now up by about 20% for the year. That's a shocking swing, matched by MP Materials, which rose over 500% at one point. It is still up 245% or so after a large drawdown . One big difference here is the involvement of the U.S. government in MP Material's future. USA Rare Earth doesn't have that same backing. However, there's another not-so-subtle difference here that investors need to understand. MP Materials has a producing mine. USA Rare Earth has plans to build a mine, which is still just in the feasibility stage. While it currently has the ability to recycle and process rare-earth metals, the big story here is the mining opportunity -- only the mine is years away from completion, and a lot could go wrong between now and then. NYSE: MP Key Data Points...

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