Key Points
USA Rare Earth is developing a mine for rare-earth metals and a magnet factory.
Over the long term, the company could produce homegrown permanent magnets for U.S. companies.
The company plans to open its first magnet factory in 2026.
USA Rare Earth(NASDAQ: USAR) isn't a name you hear every day. But its product is certainly something you encounterevery day.
The company manufactures permanent magnets, which are found in dozens of objects -- smartphones, computers, electric vehicle motors, defense systems, and more. They are rarely sourced in the U.S. (most come from China).
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As the name suggests, USA Rare Earth is trying to change that. It's aiming to become a vertically integrated company, meaning it will mine the metals that will then be processed into magnet material. You can literally count on one hand the number of U.S. companies attempting a mine-to-magnet approach like this.
The company's flagship source is Round Top Mountain in West Texas, which contains a polymetallic ore that has at least 15 of 17 rare earth elements. It's also developing a magnet factory in Oklahoma that is expected to open in the first half of 2026, while commercial production at the mine is expected in 2028.
Image source: Getty Images.
The mining stock was trading above $32 in October 2025 before a wider sell-off in the market triggered a steep decline. It now trades below $19.
For the growth stock to succeed this year, progress needs to continue on its magnet factory in Oklahoma. To that end, the company is in good favor. The Trump administration recently took a 10% stake in USA Rare Earth, providing it with $1.6 billion in funding, subject to certain conditions. The backing doesn't eliminate risk, but it does strengthen its balance sheet ahead of its ambitious attempt to build a supply chain.
Ultimately, USA Rare Earth needs to move the needle on sales. It could be several years, however, before its mine and magnet factory are in a position to generate meaningful revenue. Investors with a stomach for volatility might want to take a stake. Those with a more conservative approach may want to wait until operations are closer in sight.
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Steven Porrello has positions in USA Rare Earth. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
