Hardly a week goes by that you don’t hear about rare earth stocks. If you’ve been on the fence about this sector, you’ve come to the right place.
For starters, what are rare earth elements? Specifically, this is a group of 17 metallic elements that are essential for modern technology. The specific applications include personal electronics, renewable energy, and the defense sector.
However, as the name gives away, these elements are in scarce supply, are challenging to mine for, and are becoming front-and-center in the United States’ ongoing trade war with China.
Low supply and high demand is a bullish setup for rare earth stocks. This setup will likely exist into 2026 and beyond.
That's because the fight to secure more rare earth supply is still heating up. Granted, China did pause its rare earth restrictions for a year. However, there is still a strong possibility of more rare earth supply issues.
Which means there’s still an opportunity to buy low on rare earth stocks. Here are two names to consider.
Rare Earth Stocks #1: MP Materials
Analysts are still pounding the table over MP Materials Corp. (NYSE: MP). Despite being up over 271% in 2025 as of this writing, analysts give MP stock a consensus price target of $79, which is 36% above its closing price on December 10.
The last time we mentioned MP stock was November 20. At that time, it traded at around $58. The stock climbed to around $62 on December 8, but has pulled back some since. Still, the potential exists for the stock to race back near the consensus target, a level not seen since mid-October.
There are three short-term catalysts driving the price action. First, it operates the Mountain Pass mine in California. This is the only active, large-scale rare earth mining and processing site in North America. It’s now the backbone of the U.S. efforts to build a domestic supply chain.
Second, the U.S. Department of Defense announced it was buying $400 million worth of MP's preferred stock. This makes it the company's largest shareholder. Third, MP Materials signed a $500 million deal with Apple, which agreed to buy rare earth magnets from it.
Now, back to those analysts who are rallying MP stock even higher. Morgan Stanley just upgraded MP Materials to an overweight rating with a price target of $71 a share. The belief is that there is still a strong possibility of more rare earth supply issues, which MP Materials can assist with.
Analysts at JPMorgan upgraded the miner to an overweight rating with a price target of $74 a share. "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 #2: USA Rare Earth
USA Rare Earth (NASDAQ: USAR) has been just as explosive. In early October, USAR stock was up more than 150% in 2025. The stock has pulled back since then, but this looks like a buyable dip.
In early December, shares of USA Rare Earth (USAR) jumped from about $11.45 to $17.21. All after the company announced that its Less Common Metals subsidiary signed an agreement to supply Solvay and Arnold Magnetic Technologies Corporation with “high-quality rare-earth materials for Arnold’s production of advanced permanent magnets.”
The last time we highlighted an opportunity on USAR was on November 17, as it traded at $14.50. Now up to $17.28, we'd like to see USAR race back to $25 near term.
Final Takeaway: Rare Earth Momentum Isn't Slowing
Rare earth stocks remain one of the most compelling themes heading into 2026. Supply risks, growing U.S. demand, and strategic partnerships continue to support MP Materials and USA Rare Earth. Both companies are well-positioned to benefit as the U.S. accelerates its efforts to establish a secure, domestic rare-earth supply chain. For investors, these recent pullbacks may represent rare opportunities.
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