Is MP Materials Stock a Buy Now?

MP Materials (NYSE: MP) was on a tear in 2025. By the end of the year, shares of the rare-earth miner and permanent magnet manufacturer were up 224%. At one point in October 2025, shares of MP had climbed about 440%, before a broader sell-off in the market sent the stock back to earth.

MP stock is currently beating the market, with a roughly 10.5% gain so far this year. Even with policy winds at its back, however, a few things need to go right for this rare-earth company to have another breakout year.

America's homegrown rare-earth champion

MP Materials is a U.S.-based rare-earth company that owns and operates the Mountain Pass mine in California, which is currently one of the only large-scale rare-earth mines in the country. It also operates a facility called Independence in Fort Worth, Texas, that can turn rare-earth material into permanent magnets that generate their own magnetic field.

A "permanent magnet." Image source: MP Materials.

MP currently sits at a crossroads of geopolitical and economic currents. Rare-earth magnets are vital for tech, defense, and clean energy sectors. But for years the U.S. has relied heavily on China for magnet supply, which has given Beijing leverage over the U.S.

In July 2025, the Department of Defense (DoD) invested $400 million in MP, becoming its biggest shareholder, and entered a public-private partnership with the company. Under the agreement, the DoD will buy 100% of the magnets produced at its second U.S. magnet factory for 10 years after the facility is built. It also guaranteed a generous price floor of $110 per kilogram for MP's neodymium-praseodymium (NdPr) product.

That news helped MP stock finish July over 100% higher.

Is MP Materials a buy right now?

If you believe rare-earth demand will escalate and the U.S. will continue to look for ways to reduce dependence on China, MP looks like a long-term buy.

That said, the metals stock could get bumpy in the near term.

At its current price (about $61 per share), MP trades at 43 times sales, which means investors are paying today for revenue the company still has to prove it can earn. For perspective, the average P/S ratio for metals and mining companies is about 3.8.

The agreement with the DoD is crucial to helping MP become profitable in the near term, but it isn't guaranteed to last in its current form. The agreement itself says that continued funding to MP is still subject to Congress's approval. Any change in governmental or budget priorities could likewise affect the deal with MP.

The company also faces execution risks, not the least of which is getting its next facility up and running. It's targeting a start date of 2028, but so far it hasn't even announced a location.

The stock is a long-term buy, but if you can't stomach volatility, or are uncomfortable with the premium valuation, you might want to sit this one out for now.

Steven Porrello has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.