5 Reasons to Buy MP Materials Stock Like There's No Tomorrow

MP Materials (NYSE: MP) has been one of the market's more surprising outperformers this year, with a gain of about 237%. The rare earth miner's stock has ripped higher on the back of governmental deals and blockbuster partnerships.

For long-term investors who can stomach volatility, the mining stock's story might just be getting started. Here are five reasons MP Materials is worth looking at today.

NdFeB magnets produced by MP Materials at Independence in Fort Worth, Texas. Image source: MP Materials.

1. A monopoly-like position in U.S. rare earth

Let's start with MP's competitive moat. The company owns and operates one of the only rare earth metal mining and processing sites of scale in the U.S -- the Mountain Pass mine in California.

This mine is responsible for more than 10% of the world's rare earth supply. It's also responsible for delivering high-purity neodymium-praseodymium (NdPr), which is a key ingredient in high-performance magnets.

With the threat of tightened rare earth exports from China -- whether they ever happen or get relaxed -- MP's mine is now becoming a national security interest. That gives it a new level of strategic importance, which binds its success with a larger federal effort to onshore the very materials that the company specializes in.

2. The U.S. government put a floor on MP's business

Back in July, the U.S. Department of Defense agreed to invest about $400 million into MP Materials, becoming, in turn, its largest shareholder. In this deal, the Pentagon committed to buy all the output from MP's next magnet plan (dubbed its "10X Facility") and guaranteed a minimum price of about $110 per kilogram for neodymium-praseodymium (NdPr), one of MP's key rare earth oxides.

Considering that the current price for NdPr is about $78 per kilogram, the significance of that floor speaks for itself. In practical terms, MP now has a decade of visibility on a huge chunk of its future revenue, as well as some protection from any unfavorable fluctuations in NdPr prices.

3. A tech giant as a partner

For years, MP's pitch has been to move its business from selling concentrate to China to producing rare earth magnets on U.S. soil. 2025 has been the year MP has started delivering on this promise.

Largely due to trade tensions between China and the U.S, MP made a tough decision to stop shipping rare earth concentrates to China. Although that decision hurt the company's third-quarter revenue -- it reported zero revenue for rare earth concentrates -- it has also pushed the company further into the next phase of growth -- making finished magnets.

On that front, it inked a key deal with Apple. In July, both companies agreed to a $500 million partnership that will help MP expand its Independence magnet factory in Fort Worth. The goal is for MP to supply 100% U.S.-made magnets for hundreds of millions of Apple devices starting in 2027.

4. The balance sheet is loaded

For all its growth potential, MP is still posting losses. Third-quarter revenue, for instance, declined year over year, as rare earth prices softened. It's also burning cash as it continues to build out its magnet factories.

MP Revenue (TTM) data by YCharts.

At the same time, the company has a strong balance sheet with a sizable cash position. It posted about $1.9 billion in cash and short-term investments at the end of its third quarter. At its current cash-burn rate, on the order of a few million a year, that should give it some runway before it'll need a fresh cash injection.

5. A new deal in Saudi Arabia

In November, MP Materials and the Pentagon jointly announced a surprise deal with the Saudi Arabian Mining Company, Maaden. Under the agreement, MP and the U.S. government will construct a rare earth refinery in Saudi Arabia.

Both MP and the Pentagon will jointly own 49% of the venture, while Maaden will hold at least 51%. The financing portion of the project will come from the U.S. government, while marketing and technical expertise will come from MP.

For MP investors, this deal does a couple of things. One, it's a capital-light way for MP to expand its global footprint, as well as deepen ties with a major mining partner. Two, it reinforces MP's growing role within Washington as its preferred rare earth miner. That position is hard to put on a balance sheet but could mean MP will be linked to other projects in the future.

None of this, of course, removes risk. MP still has to ramp up magnet production, as well as complete the construction of its 10X Facility. However, for investors who believe the U.S. is committed to reshoring rare earths, the case for buying MP stock sooner rather than later is hard to ignore.

Steven Porrello has positions in MP Materials. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.