The Best Way To Invest In This Vital Tech Resource

Page 1 of 2

Entrepreneurs have a saying: “When everyone is digging for gold, we want to sell the shovels.”

We’ve seen the effect technology has had in the past 30 years, in everything from cellphones and computers to the cars we drive. These kinds of technological marvels will continue to be staples of the economy long after our children are grown.

So what’s the one element that all technology depends on?

To start with, technological advancement wouldn’t be possible without certain materials — so-called rare earth metals.

Comprising 17 different elements with names like names like yttrium, neodymium, promethium and dysprosium, rare earths are vital to a huge array of high-tech products and clean-energy initiatives like hybrid engines.

China controls 95% of the world’s supply, creating a virtual monopoly on these resources. Since 2009, China has attempted to curb exports, prompting Russia to announce a $1 billion investment into the sector by 2018 to cut Chinese dependence.

Molycorp Inc (NYSE:MCP)Although China controls the vast majority of these metals, the United States has a stake in the field through a small $1.2 billion company – Molycorp Inc (NYSE:MCP).

Molycorp has 26 locations spread across 11 countries. Its downstream operation ties it to the prices of rare earths, but that could prove to be a boon if rumors about China planning to buy these metals to build a national stockpile are true. The speculation on Molycorp has caused shares to rise nearly 12% since those reports surfaced last week.

Copyright © 2013 Molycorp, Inc.

As of 2012, global demand for rare earths was around 145,000 metric tons, but supply was limited to just 113,000 — worldwide demand is forecast to rise 7.6% by 2015, up to 180,000 metric tons.

According to management, companies reliant on these materials have held reduced inventories, but as demand picks up, the same companies will need to replenish their supplies and will look to Molycorp. As a business with a high barrier to entry, Molycorp has few competitors outside of China. The closest may be the Australian LYNAS CORP ADR (OTCMKTS:LYSDY), a $794 million miner that trades as a penny stock.

Molycorp missed earnings expectations last month, but MCP has rebounded almost to its original price level after a 19% drop. Considering that earnings are expected to increase 93% to profitability in 2014, it may be time to officially say the bottom has passed and acknowledge that this stock is in value territory.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!