Rare earth stocks are moving higher after the U.S. and China hit pause on the rare earth issue.
But it may not be time to call all clear on rare earth stocks. Things could spiral out of control again.
That's because China now wants to prevent the U.S. military from getting its rare earth supply.
As noted by CNBC, "Beijing will not allow the export of rare earth materials for use by foreign militaries, China's Ministry of Commerce announced on October 9. These are the first restrictions imposed by China that specifically target the defense sector, according to Gracelin Baskaran, a critical minerals expert at the Center for Strategic and International Studies."
Considering rare earths are critical in U.S. weapons systems, this could get bad again. If that's the case, investors may want to jump into rare earth stocks again, including:
Rare Earth Stocks to Buy: MP Materials
One of the biggest rare earth winners of the bunch has been MP Materials Corp. (NYSE: MP). Since late April, MP stock has raced from about $25 to a current price of $56. And even after a pullback of over 24% in the last three months, MP stock is up more than 263% in 2025.
JPMorgan believes MP is set to benefit from supply-demand issues. The firm upgraded the miner to an Overweight rating with a price target of $74 a share. That’s only slightly below the consensus price target of $79 per share, a 41% gain from its price as of this writing.
"Our new rating reflects our view that rare earths national security concerns are 'here to stay' despite China's reported one-year pause on export restrictions, with risks remaining, especially for military exposure," they said, as quoted by CNBC.
"MP's unique mine-to-magnet vertical integration positions the company as the ex-China leader ready to immediately begin addressing these concerns, although it will ultimately take multiple players over many years to sort out."
Rare Earth Stocks to Buy: USA Rare Earth
USA Rare Earth (NASDAQ: USAR) is a development-stage critical minerals company focused on advancing a fully integrated rare earth element (REE) and lithium project in the United States.
The financial crisis of 2007-2008 introduced the phrase “too big to fail” as it related to the top U.S. banks. In 2025, the term applied to USA Rare Earth might be “too important to fail.”
The company recently announced that the United Kingdom (UK) approved USAR’s acquisition of Less Common Metals (LCM) positions the company to be a critical second source for rare earths.
It’s important to note, however, that USAR is still a development-stage company and won’t begin commercial operations until 2026, at the earliest.
Analysts at Benchmark have a buy rating on the USAR stock. The firm cites a recent executive order from President Trump that prioritizes the development of rare earths in the United States. They also cited the company's commercial production of rare earth magnets by 2026.
Rare Earth Stocks to Buy: Lynas Rare Earth
Another way to trade or invest in rare earth stocks is with Lynas Rare Earth (OTCMKTS: LYSCF). The Australian company engages in the exploration, development, mining, extraction, and processing of rare earth minerals primarily in Australia and Malaysia. The company holds an interest in the Mount Weld project, Western Australia.
LYSCF stock is not traded on a major U.S. exchange. As a consequence it doesn’t receive significant analyst coverage. Nevertheless, risk-tolerant investors will note that the stock is up more than 145% in 2025, making it one of the top choices in this promising sector.
Investing in rare earth stock is still in the speculative stage. That doesn’t mean it won’t be profitable. But that day is not today. One way for you to hedge against downside risk in any specific stock is with the VanEck Rare Earth and Strategic Metals ETF (NYSEARCA: REMX).
With an expense ratio of 0.56%, the ETF provides direct access to the rare earth and strategic metals markets. Plus, according to VanEck, "Companies must derive at least 50% of total revenues from the rare earth/strategic metals industry to be added to the Index."
The fund provides exposure to a variety of sectors and subsectors within the Materials and Metals & Mining sectors. Over 75% of the fund’s holdings are from U.S., Chinese and Australian companies.
The Time is Now
Rare earth stocks remain a high-risk, high-reward corner of the market, but geopolitical tensions continue to make them impossible to ignore. China's latest restrictions show how quickly supply chains can be disrupted, especially for the U.S. defense sector.
For investors, the best approach is selective exposure, favoring established producers, promising U.S. developers, or diversified ETFs.
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