Could Buying MP Materials Stock Today Set You Up for Life?

Key Points

• MP Materials operates the Mountain Pass Rare Earth Mine, the only significant rare earth mining facility in North America

• It provides essential materials for technology sectors like electric vehicles, defense, and aerospace.

• The U.S. Department of Defense has made a historic investment in MP Materials.

• 10 stocks we like better than MP Materials ›

MP Materials (NYSE: MP), a lesser-known player in the mining sector, has captured attention following a significant investment from the U.S. government earlier this year. As the operator of one of the only rare earth magnet companies in the United States, MP has found itself in the spotlight amid the U.S.'s ongoing trade war with China. Rare earth materials play a pivotal role in defense, technology, and other vital industries, resulting in heightened interest from investors.

With this newfound momentum and the backing of U.S. initiatives, could investing in MP Materials today set up investors for life? Below, I'll delve into the business and what the future has in store for it.

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MP Materials provides crucial rare earth materials

MP Materials Corporation owns and operates the Mountain Pass Rare Earth Mine and Processing Facility in San Bernardino County, California, the only scaled rare earth mining and processing site in North America. At Mountain Pass, the company extracts, refines, and separates high-purity rare earth materials.

It manages the entire supply chain from mining and processing to advanced metallization and magnet manufacturing. In its materials segment, it generates revenue primarily from the sale of rare earth concentrates, like neodymium-praseodymium (NdPr) oxide. In its magnetism segment, it produces and sells magnetic precursor products and anticipates manufacturing neodymium-iron-boron (NdFeB) permanent magnets by the end of 2025.

Its products are critical inputs for advanced technology systems across various sectors, including electric vehicles, wind turbines, robotics, defense, and aerospace.

The U.S. Department of Defense's historic investment

Historically, a significant portion of MP's rare earth concentrate was sold to a single customer in China, Shenghe Resources, which accounted for approximately 80% of its consolidated segment revenue last year and 40% in the first six months of 2025. It has recently ceased concentrate shipments to China due to tariffs and export restrictions. It's now prioritizing the sale of separate products to customers outside China, such as in Japan and South Korea.

Image source: Getty Images.

MP Materials has been in the news due to significant developments, particularly involving strategic partnerships as geopolitical tensions heat up. In July, it announced a "transformational public-private partnership" with the Department of Defense (DoD) to accelerate the buildout of an end-to-end U.S. rare earth magnet supply chain and reduce foreign dependency. This multibillion-dollar package includes:

• A $400 million equity investment from the DoD in newly authorized Series A Preferred Stock.
• A warrant issued by the company to the DoD, exercisable for 11,201,659 shares of Common Stock at $30.03 per share, positioning the DoD to become the company's largest shareholder with an aggregate 15% ownership on an as-converted and as-exercised basis.
• A $150 million loan from the DoD to support the expansion of heavy rare earth separation capabilities at its Mountain Pass facility.
• A 10-year price floor commitment by the DoD for NdPr products at $110 per kilogram, starting in the fourth quarter this year.
• A 10-year off-take agreement for the DoD to ensure purchases up to 100% of the magnet production from its planned 10X Facility (the company's second domestic magnet manufacturing facility), with a minimum earnings before interest, taxes, depreciation, and amortization (EBITDA) guarantee of $140 million annually, adjusted for inflation.

Also in July, MP Materials entered a definitive, long-term supply agreement with Apple for the development, manufacture, and supply of magnets from its Independence Facility, along with establishing recycling capabilities at Mountain Pass. Apple agreed to make $200 million in prepayments, subject to milestone achievements.

Could buying MP Materials set you up for life?

MP Materials is strategically positioned to be a national champion in rare earth magnetics, leading the build-out of a domestic supply chain that supports American industry and national security. The partnership with the DoD aims to accelerate the creation of an end-to-end U.S. rare earth magnet supply chain and reduce foreign dependency.

Analysts project it could earn $0.80 per share in 2026 and $1.28 per share in 2027. Given these forecasts, investors buying the stock today are paying 89 times next year's earnings and 60 times 2027's earnings, making the stock expensive and vulnerable to increased volatility.

MP Materials will play a key role in helping the U.S. gain more security over its rare earth materials, and the contract with the DoD provides it with reliable cash flow. The stock could do well as the U.S. supports domestic rare earth production.

That said, the stock is expensive today, and you never want to rely on a single company to build wealth. If you do own it, ensure it's part of a broadly diversified portfolio.

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Courtney Carlsen has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.