This Rare-Earth Stock Trading Under $40 Could Be the Reshoring Trade's Best-Kept Secret
Key Points
The U.S. has made the shoring up of its rare-earth supply a national priority.
MP Materials and USA Rare Earth are leading rare-earth investment options.
When President Donald Trump returned to the Oval Office in 2025, he made strengthening America's rare-earth element supply a priority to help free it from China's dominance. After he signed executive orders to that effect, investors began showing much greater interest in mining the market for the most compelling rare-earth opportunities.
Identifying which tickers provide the best investment opportunities can be tricky. Fortunately, there's one option that is a clear winner for those who seek a rare-earth investment that avoids exposure to China.
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Dig this rare-earth ETF
The Sprott Rare Earths Ex-China ETF (NASDAQ: REXC) is an exchange-traded fund (ETF) that targets companies generating the majority of their sales from mining, separation, refining, or producing of rare-earth materials. It offers investors exposure to a diverse set of leading rare-earth stocks and focuses only on those that operate outside of China.
Of the 41 holdings, the largest position in the fund is MP Materials (NYSE: MP), a familiar name to rare-earth investors as the company operates the only mining and processing facility in the United States. Another of the usual suspects is USA Rare Earth (NASDAQ: USAR), which is also among the top five positions.
Lest investors think that the fund is only composed of American companies, it's actually Australian companies that make up the lion's share of the holdings. Companies from Down Under have a 48% weighting, while U.S. companies have a 40% weighting.
Solid rare-earth exposure that won't cost an arm and a leg
U.S. interest in shoring up its supply of rare-earth elements is unlikely to taper off anytime soon, making the Sprott Rare Earths Ex-China ETF a solid long-term investment option. It's especially appealing as the companies in the fund get closer to completing their development projects. Another compelling feature of this rare-earth ETF is its low cost: a modest 0.65% expense ratio.
Recognizing that the successful development of rare-earth projects isn't guaranteed, investors may balk at MP Materials stock (and others), but the Sprott Rare Earths Ex-China ETF provides ample exposure with mitigated risk, making it a rock-solid option.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MP Materials. The Motley Fool has a disclosure policy.