Key Points
MP Materials now has vertical integration that can boost its profit margins.
The company’s deal with the U.S. Department of Defense sets a pricing floor that insulates it from cyclical downtrends.
MP is expanding its top-tier commercial partnerships.
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How you view MP Materials (NYSE: MP) probably depends on whether you’re optimistic or pessimistic by nature. Optimists can highlight the rare-earth mining company’s huge stock gains over the last 12 months. Pessimists might point out that MP Materials is about 40% below its October 2025 peak.
Is the stock undervalued? Wall Street seems to think so. The consensus 12-month price target reflects a potential upside of 36%. Here are three reasons to buy this mining stock in 2026.
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1. Going vertical
For years, MP Materials was only a mining company. Now, though, it’s vertically integrated. The company’s Independence facility in Fort Worth, Texas, began producing its first NdFeB (neodymium-iron-boron) magnets in the fourth quarter of 2025.
This facility has an initial capacity to produce 1,000 tons of magnets. However, MP Materials plans to expand the capacity to 3,000 tons. MP is also building a new facility, 10X, that will add 7,000 tons of capacity.
MP’s vertical integration will significantly boost margins. Magnets are much more profitable than raw concentrate. Many investors could underestimate the margin expansion that MP Materials’ Independence and planned 10X facilities will enable.
2. Uncle Sam provides a boost
In the past, MP Materials was a cyclical stock that rose and fell with rare-earth metal prices. Those cycles are still a reality, but the downswings won’t be nearly as bad for MP going forward — thanks to Uncle Sam.
Image source: Getty Images.
Last year, the U.S. Department of Defense inked a 10-year deal with MP Materials that establishes a price floor of $100 per kilogram for the company’s NdPr (neodymium-praseodymium) products. The DoD will also guarantee that 100% of magnets produced at MP’s 10X facility will be purchased by defense or commercial partners.
This agreement translates into stable, predictable cash flow for MP Materials. That’s something investors should love.
3. Expanding top-tier partnerships
MP Materials’ magnets are in high demand for use in electric vehicles, drones, robots, and data centers. They’re also key components in smartphones and computers. As the only large-scale U.S.-based supplier, this demand is opening doors for MP Materials to expand its top-tier partnerships.
The company’s $500 million long-term deal with Apple (NASDAQ: AAPL) is a case in point. Under the agreement, MP Materials will supply Apple with magnets produced at its Independence facility. These magnets will use recycled rare-earth feedstock processed at MP’s Mountain Pass facility in California.
A solid risk-reward proposition
Like any stock, MP Materials faces some risks. For example, the company still faces the negative impacts of global trade policies. However, MP’s opportunities appear to more than offset those risks. This stock offers a solid risk-reward proposition, in my view.
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Keith Speights has positions in Apple. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.
