Time to Buy the Dip on MP Materials Stock?

MP Materials (NYSE: MP) is at the forefront of a critical opportunity as the U.S. seeks to secure a domestic supply of essential minerals and rare-earth materials. That's because, according to research from The Motley Fool, China currently accounts for 90% of rare-earth processing, which could pose a risk to crucial supply chains that rely on these rare-earth elements.

The U.S. government is stepping in and investing in miner stocks through an ambitious "mine-to-magnet" strategy aimed at securing domestic production, and MP Materials has been one beneficiary. With the stock down 47% from its October peak, now might just be the time to invest.

MP Materials is leading the charge in domestic rare-earth magnet production

MP Materials holds a unique position in the rare-earth magnet space as a domestic supplier and owns the only rare-earth mining and processing site of scale in North America, the Mountain Pass Rare Earth Mine and Processing Facility in California. Neodymium-praseodymium (NdPr) is a critical feedstock for rare-earth magnets used across sectors such as electric vehicles, robotics, and defense.

Last year, MP Materials secured a landmark public-private partnership agreement with the U.S. Department of Defense to purchase its NdPr products. In the agreement, the DOD established a price floor of $110 per kilogram for these crucial products for approximately 10 years. In return, the U.S. government got a 15% stake in MP Materials.

The company is undergoing a transformation from a concentrate exporter to a vertically integrated mine-to-magnet manufacturer. As part of this, the company is cutting China out of the picture. It had historically mined ore in California and then sent it to China for processing; now, the entire supply chain will be domestic.

Image source: Getty Images.

MP now retains its mined materials for domestic separation and refining at its Mountain Pass facility. Last year, it produced a record 2,599 metric tons of NdPr oxide (the raw ingredient used in these important magnets).

It has begun commercial production of rare-earth metals and alloys at its Fort Worth, Texas, facility, where its current magnet capacity is 1,000 metric tons. It plans on expanding its Fort Worth Facility to produce 3,000 metric tons of magnets annually. Meanwhile, it has a second facility, called 10X, in the works, which will increase its magnet manufacturing capacity to 10,000 metric tons annually.

MP Materials is an investment in future U.S. magnet production

MP Materials stands out as one of the more promising mine-to-magnet companies in the U.S. right now, thanks to its established mining and processing facilities in California and Texas. The company has a first-mover advantage and contracts with Apple and General Motors outside of its DOD agreement. Analysts project revenue could more than double in 2026 to $508 million and double again by 2028 to over $1 billion.

That said, the company still has work ahead as it expands its manufacturing capabilities through its 10X facility, which it expects to begin commissioning in 2028. The stock faces execution risk as it ramps up manufacturing capacity, but for aggressive investors who understand this risk, the recent dip is a good opportunity to scoop up shares of this domestic mining stock.

Courtney Carlsen has positions in Apple and MP Materials. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool recommends General Motors and MP Materials. The Motley Fool has a disclosure policy.