Why MP Materials Stock Just Popped Big-Time

MP Materials (NYSE: MP) stock soared 18.7% through 9:55 a.m. ET Monday after China threatened to throttle rare-earth exports to the United States -- making developing a domestic rare-earth mining and refining industry more urgent than ever.

President Donald Trump tried to reassure investors that China isn't serious about its rare-earth threats, and that everything "will all be fine." But just in case it isn't, investors are bidding up shares of MP and similar start-ups.

Image source: Getty Images.

Bad news is good news

Stock market investors aren't the only ones uncertain the trade war will end in unicorns and rainbows. Whether or not China tightens the screws on rare-earth exports, the U.S. Defense Department wants to be prepared for the worst, and is building a $1 billion stockpile of critical minerals, as London's Financial Times reports.

Investment bank JPMorgan Chase may be getting into the rare-earths game as well. In comments Monday, CEO Jamie Dimon said it's "painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing -- all of which are essential for our national security." To help fix this (and earn some profit), JPMorgan aims to invest $10 billion over the next decade in several critical sectors.

These include defense and aerospace, artificial intelligence and quantum computing, energy technology, and supply chain and advanced manufacturing.

Is MP Materials stock a buy?

Rare earths necessary for many of the other sectors also fall under the "supply chain" sector, giving JP two great reasons to invest in rare earths. While I admit I'm not thrilled with the valuation on MP Materials stock -- nearly 140 times forward earnings -- it's pretty clear how a vote of confidence from Dimon could help to drive this stock higher.

JPMorgan Chase is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.