A breakout in this rare earths stock is taking place, according to the charts
Nikola Tesla once said: “A thousand years hence the telephone and motion picture camera may be obsolete, but the principle of the rotating magnetic field will remain a vital living thing for all time to come.” Just today we added a 3% position in MP Materials , symbol “MP,” in our Active Opps portfolio and a 2% stake in our Tactical Alpha Growth portfolio. MP is the United States’ only large-scale producer of rare earth minerals, producing 15% of the world’s supply or rare-earth oxides — the essential building block of high-strength permanent magnets. According to the MP website, its story is simple: “MP Materials was founded to acquire Mountain Pass (California) when the site was idle and on the brink of closure. Since then, we have restored the full rare earth supply chain in America. … magnetics is synonymous with motion.” These magnets are the building blocks of powering everything from electric vehicles to wind turbines to smartphones and defense systems. The current administration is prioritizing domestic supply chains for these critical minerals as China is the dominant global supplier and is viewed to be weaponing this stronghold. In July, the U.S government invested $400 million in preferred stock, plus warrants, along with $1 billion in funding from JPMorgan and Goldman Sachs to fund a new plant to make rare-earth magnets. And just this morning, the Trump administration announced plans to expand the U.S. strategic uranium reserve. Uranium is not part of the MP’s business, but the policy corroborates the message that Washington is serious about securing a domestic supply chain of energy and minerals. Looking at the weekly chart, we see the stock fell from a high of $60.25 in 2022 all the way below $10 — before rebounding to break that previous record. The $60.25 has gone from being resistance to support. The outlook for 2026 revenue of $706.55 million, 150% above this year, and 70 cents in earnings per share, 243% above this year, should be enough to keep the floor of support at $60.25. Moving down to the daily chart, we can see the stock traded above $80 in August and has since corrected lower in an A-B-C correction back to the scene of the $60.25 breakout, along with the blue 50-period moving average, both offering support. I added this morning a half-size positions in MP against the floor of support and with additional confirmation of a breakout above $75 I’ll look to add the other half and move stop losses up. If this current thesis of entry at $66 doesn’t work, I’ll look to cut the position back below $60. Looking ahead to the next two quarters analysts are expecting revenue growth of 89% and 146%. The power of active portfolio management is found in blending technical analysis with fundamental analysis, and a disciplined approach to risk management with the goal of generating returns above those offered in the simple index benchmarks — MP Materials is a great example. In our Active Opps portfolio we hold a 3% allocation. You can access that portfolio here . -Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and regular subscriber updates like the idea presented above. DISCLOSURES: (Gordon owns MP personally and in his wealth management company Inside Edge Capital). All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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