Here's Why USA Rare Earth Shares Rose Again Today
Key Points
There's no change in the fundamental need for the U.S. to secure a domestic supply of rare earth materials and magnets.
The current administration continues to invest in critically important industries.
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Whether investors like it or not, rare earth stocks are politically sensitive. That argument holds for several reasons. As such, when they move in favor of USA Rare Earth (NASDAQ: USAR) and others, then the stocks are likely to rise. That fact goes a long way to explaining why the stock was up 6.3% at 11:30 a.m. today.
A favorable environment for USA Rare Earth
Yesterday, I discussed how the market realized there wasn't actually a major breakthrough in the current trade impasse between the U.S. and China, specifically regarding the export of rare earth materials. In addition, there's no change in the importance of the U.S. securing a reliable domestic source of rare earth materials and magnets.
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That point was highlighted by the $19.3 million award (subject to negotiation) to USA Rare Earth to develop "the development of a pilot-scale rare earth element ("REE") separations project advancing domestic processing capacity."
More support for rare-earth coming
The lack of a rare-earth deal with China, and the active ongoing participation of the U.S. government in investing in strategically important industries support the idea that the administration will continue to create favorable conditions for rare-earth companies. That view was enhanced by yesterday's news that the administration will invest $2 billion in quantum computing companies.
Image source: Getty Images.
The current administration isn't backing off on support for critical industries; it's increasing that support, and that's good news for USA Rare Earth.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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