USA Rare Earth, Inc. (USAR): A Bull Case Theory

We came across a bullish thesis on USA Rare Earth, Inc. on The Analyst's Journal’s Substack by A_Capital. In this article, we will summarize the bulls’ thesis on USAR. USA Rare Earth, Inc.'s share was trading at $13.64 as of December 2nd. USAR’s trailing P/E was 20.27, according to Yahoo Finance.

USA Rare Earth, Inc. engages in mining, processing, and supplying rare earths and other critical minerals in the United States. USAR presents a speculative opportunity in the critical minerals sector, positioned at the crossroads of U.S. national security priorities and the accelerating clean energy transition. The company is developing domestic rare earth processing and NdFeB magnet manufacturing capabilities, aiming to reduce U.S. dependence on China, which currently dominates global rare earth supply chains.

Its vertically integrated model—spanning mineral processing, separation, and downstream magnet production—targets high-value applications in defense, electric vehicles, wind turbines, and industrial automation. USA Rare Earth benefits from strong geopolitical and policy tailwinds, with multiple federal initiatives such as the Defense Production Act and Inflation Reduction Act supporting reshoring of critical mineral infrastructure. However, despite its strategic importance, the company remains pre-revenue, faces heavy cash burn, and trades 55% below its peak valuation amid execution and financing concerns.

Operational success depends on achieving commercial-scale processing efficiency and securing long-term offtake agreements with defense and EV manufacturers. Financially, USA Rare Earth is in early development, with limited liquidity, significant operating losses, and recurring equity dilution to fund progress. Capital requirements for facility completion are expected to exceed $200–400 million, underscoring near-term funding pressure.

Yet, potential catalysts—including government grants, financing deals, and customer contracts—could substantially re-rate the stock if execution improves. For risk-tolerant investors, the current valuation reflects substantial pessimism but also asymmetric upside if the company fulfills its strategic role in rebuilding U.S. rare earth independence. Given its binary outcome profile, USA Rare Earth is rated a Speculative Buy for investors with a 3–5-year horizon and high risk tolerance.

Previously we covered a bullish thesis on MP Materials Corp. (MP) by Steve_Zissouu in April 2025, which highlighted the company’s vertical integration and alignment with U.S. efforts to strengthen domestic rare earth supply chains. The company’s stock has appreciated approximately by 162.35% since our coverage as the thesis played out. The thesis still stands as MP remains pivotal to U.S. mineral independence. A_Capital shares a similar view but focuses on USA Rare Earth’s speculative upside.

USA Rare Earth, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held USAR at the end of the second quarter which was 8 in the previous quarter. While we acknowledge the risk and potential of USAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than USAR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.