Rare earth metals, also known as rare earth minerals or rare earth elements, have made headlines during the last couple weeks after China, which produces over 95 percent of the metals reported that it would reduce its export quotas by more than 10 percent during the first six months of 2011. The news caused the rare earth metals stocks to explode. As an example, Rare Element Resources Ltd. (REE) moved from 9.34 on December 17 to 17.16 on January 3, an 83% increase in just a little over two weeks.
Rare earths are used for such applications as superconductors, magnets, electronic polishers, car batteries, luminescent materials, lasers, optical-fiber communication systems, welding, night vision goggles, rangefinders, and radar. The rare earth metals are:
Other metals and elements are often (incorrectly) referred to as rare earth metals such as lithium and manganese. However, many of the companies involved in the mining of the rare earth metals are also involved in mining some of the other scarce elements.
Rare Element Resources is a Vancouver based company that explores for and develops mines in Canada and the United States, including the Bear Lodge property located in northeast Wyoming. This debt free company has 32 cents per share in cash, however the company reported a 6 cents per share loss for the quarter ended September 30.
Molycorp, Inc. (MCP) is another company involved in the rare earth industry, based in Greenwood Village, Colorado.The company has $5 million in debt, and over $351 million in cash, with $4.27 in cash per share. Latest earnings were a loss of 97 cents per share.
Another way to play this market is through the processors of rare earth metals, such as Neo Material Technologies, Inc. (NEM.TO) (NEMFF.PK), which trades on both the Pink Sheets and the Toronto Stock Exchange. This Toronto, Ontario based company processes rare earths, magnetic powders, and other metals. The company distributes cerium, lanthanum, europium, neodymium, dysprosium, yttrium, and other materials. The stock has a price to earnings ratio of 17.9 with a forward PE of 14. It also has an extremely favorable price earnings growth ratio of 0.31. Earnings for the latest quarter were up 53.4% on a 68.7% revenue increase.
A more conservative approach to rare earth investing is through the Market Vectors Rare Earths/Strategic Metals Exchange Traded Fund (REMX). This ETF has gone from 19.51 at the end of October to 25.63 now, a 31% increase in a couple months.
To see a free list of over 25 rare earth metals stocks, which can be downloaded, sorted, and updated, go to WallStreetNewsNetwork.com.
Disclosure: Author did not own any of the above at the time the article was written.