Is the White House About to Invest in These Lithium and Rare Earth Miners?

For long periods of history the White House avoided picking winners in the stock market.

Not anymore!

In fact, you might now call President Donald Trump the Stock Picker in Chief.

Companies the current administration has directed investments into so far include Intel, Trilogy Metals, Lithium Americas, and MP Materials.

Those stocks went to the moon after news of the government stakes.

Now, two more stocks -- USA Rare Earth (NASDAQ: USAR) and Critical Metals (NASDAQ: CRML) -- are rumored to be in the Trump administration's sights. Should the White House decide on a government stake in these companies, their stocks too will likely soar.

But by how much?

First four investments

Let's look at the first four investments for some guidance.

MP Materials: On July 10 the company announced a deal in which the U.S. Department of Defense would inject $400 million into its preferred stock, convertible to common shares. The stock of the rare earth materials company rocketed skyward in the following days and is now 150% higher at the time of this writing.

Intel: The Trump administration bought an $8.9 billion stake in the semiconductor manufacturer on Aug. 22, about a 10% stake. The share price is up 49% since that date.

Lithium Americas: On Oct. 1 the U.S. Department of Energy announced a planned 5% stake in the Vancouver-based mining company to boost the U.S. supply of lithium. The stock has since climbed 45%.

Trilogy Metals: On Oct. 6 the U.S. government announced it will invest $35.6 million in the metal exploration and development company, a 10% stake, in order to secure access to critical mineral projects in Alaska. The stock is up 240% since the announcement.

Image source: Getty Images.

New investments

Rare earth metals are a group of 17 chemically similar metallic elements. They're not actually that rare, but they tend to occur together in nature. And they are an essential component of high-tech devices ranging from cellular phones and computer hard drives to electric vehicles, computer monitors, and televisions, among many other products. They're also key components of defense technologies like guidance systems, lasers, and radar and drone systems.

Unfortunately for the U.S., China now produces some 60% of the world's rare earths and it processes nearly 90%, giving it a near monopoly.

As for lithium, there is no shortage in the U.S. of the lightest metal, which is essential for energy storage technologies like lithium-ion batteries. But most U.S. lithium resources are considered unconventional and require next-generation technologies to extract and process them for manufacturing purposes.

Seeking supplies

In a bid to further reduce U.S. dependence on China for rare earth materials, the U.S. government continues to seek ways to gear up domestic supplies of these elements. And it needs to build out the technologies to supply enough lithium for all the new technologies that use it.

To those ends, the government continues to look for equity investments that would bolster supplies of these essential materials. The latest speculation in the market is that USA Rare Earth, a rare earth metals mining company, is next on Trump's list.

And in fact the company's CEO Barbara Humpton told CNBC that the company is in close communication with the administration. The stock is up more than 60% in October.

As for Critical Metals, which has an interest in Greenland's largest rare earths project, rumors have swirled around Wall Street in recent days that the U.S. government is eyeing a stake. But at the moment that's speculation. Nevertheless, the stock has climbed 60% this month.

At the moment these are mostly rumors, some based in fact more than others.

But keep in mind that the U.S. government has billions of dollars to invest in companies it deems essential to the U.S. economy or defense, plus hundreds of billions more in terms of government contracts or grants.

So any investors who guess right on Uncle Sam's next investment may win the jackpot.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends MP Materials and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.