Shares of rare earth materials producers such as Energy Fuels (NYSE:UUUU) and MP Materials (NYSE:MP) got a boost from China’s new export policy. UUUU and MP stocks increased 8.8% and 9.8%, respectively, with the upward trend continuing in the pre-market session on December 22.
Under the new export policy, China has banned the export of technology that is required to make rare earth magnets as of Thursday. This marks the extension of its existing ban on the technology used to extract and separate rare earth materials.
With this background, let’s look at the Street’s recommendation for MP and UUUU stocks.
Are Rare Earth Stocks a Good Investment?
According to analysts, rare earth stocks like MP and UUUU are good investments. MP Materials is transitioning from upstream to midstream or refined product producers. Moreover, it is focusing on ramping up production. On the other hand, Energy Fuels said earlier this year that it plans to start producing NdPr (neodymium-praseodymium) oxide in Utah by 2024.
NdPr oxide is crucial in manufacturing permanent magnets, an essential component in EVs, turbines, and other electric motors. Consequently, the ban imposed by China and solid demand position these companies favorably to generate solid financials.
Three analysts cover UUUU stock, and all recommend a Buy, translating into a Strong Buy consensus rating. Moreover, analysts’ average price target of $9.54 implies an upside potential of 26.02% from current levels. As for MP Materials, eight out of nine analysts suggest buying it. One analyst has a Hold. Overall, it has a Strong Buy consensus rating. Further, analysts’ average price target of $26.14 implies 31.09% upside potential.
