Nikola Tesla once said: “So phones and movie cameras may become outdated, but the principle of rotating magnetic fields remains a vital creature forever.” Just today, we added a 3% position in MP material, the symbol “MP”, to our active OPPS portfolio, and a 2% stake in our tactical alpha growth portfolio. MP is the only large-scale producer of rare earth minerals in the United States, producing 15% of the world’s supply or rare earth oxides. This is an important component of high-strength permanent magnets. According to the MP website, the 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, it has restored the American rare earth supply chain. … Magnetic is synonymous with movement.” These magnets are building blocks that supply everything from electric vehicles to wind turbines, smartphones and defense systems. The current administration prioritizes the domestic supply chains of these key minerals as China is the dominant global supplier and is seen as a weapon on the base. In July, the US government invested $400 million in preferred stock and warrants, and $1 billion in funding from JPMorgan and Goldman Sachs to fund a new plant to make rare earth magnets. And this morning, the Trump administration announced plans to expand the US strategic uranium reserve. Although uranium is not part of MP’s business, the policy supports the message that Washington is serious about securing its energy and mineral supply chain in the country. Looking at the weekly charts, we can see that in 2022 the stock price fell from $60.25 from a high of under $10. $60.25 went from resistance to support. The forecast for revenues of $706.55 million for 2026, surpassing 150% this year, earnings per share, and 70 cents per share, and this year, above 243%, is enough to keep the support floor at $60.25. Going to the daily charts, you can trade stocks over $80 in August, then return to the breakout scene with the ABC revision of $60.25, providing support along with the blue 50-year moving average. This morning I’ll add a half size position to the support floor in MP and with a confirmation of an additional breakout of over $75, I’ll add the other half to move the stop loss. If the paper in this current entry for $66 doesn’t work, consider reducing positions under $60. Looking forward to analysts in the next two quarters is to expect revenue growth of 89% and 146%. The power of active portfolio management is seen in a blend of technical and basic analytics, as well as a disciplined approach to risk management aimed at generating returns above what is offered by simple index benchmarks. MP materials are a great example. In the active OPPS portfolio, we hold a 3% allocation. You can access that portfolio here. -Todd Gordon, founder of Inside Edge Capital, LLC, offers active portfolio management and regular subscriber updates like the ideas mentioned above. Disclosure: (Gordon personally owns MPs and his wealth management company, Inside Edge Capital). All opinions expressed by CNBC Pro contributors are their opinions solely and do not reflect the opinions of CNBC, NBC Universal, its parent company or its affiliates and may have been previously sown on television, radio, the Internet, or another medium. The above content is subject to our terms and conditions and privacy policy. This content is for informational purposes only and is not aware of any financial, investment, tax, legal advice or recommendations for purchasing security or other financial assets. Content is inherently general and does not reflect the unique personal circumstances of the individual. The above content may not be suitable for your particular situation. You should strongly consider seeking advice from your own financial or investment advisor before making any financial decisions. For the full disclaimer, click here.
