10 Best High-Upside Materials Stocks to Buy

3. USA Rare Earth Inc. (NASDAQ:USAR)

Potential Upside: 57.19%

Number of Hedge Fund Holders: 30

USA Rare Earth Inc. (NASDAQ:USAR) is one of the 10 best high-upside materials stocks to buy. On January 26, the U.S. Commerce Department issued a letter of intent on Jan. 26 to provide USA Rare Earth Inc. (NASDAQ:USAR) with a $1.3 billion loan and $277 million in federal funding, in exchange for issuing 16.1 million shares of common stock and 17.6 million in warrants to the U.S. government, which will have an 8% to 16% stake in the company depending on how it executes its warrants.

Meanwhile, on January 29, USA Rare Earth Inc. (NASDAQ:USAR) completed a private investment in public equity (PIPE) financing, raising about $1.5 billion in gross proceeds. As part of the financing, the company issued about 69.8 million shares of common stock at $21.50 per share. The company plans to use the net proceeds to accelerate the development of its mine-to-magnet value chain.

Shortly after these deals, on January 30, Cantor Fitzgerald raised its price target on USA Rare Earth Inc. (NASDAQ:USAR) to $35 from $28 while maintaining an Overweight rating on the stock. The analyst noted that the company’s recent deals gave it access to about $3.5 billion in capital, allowing it to shift its focus to execution around magnet production, which could potentially generate $1.2 billion in EBITDA by 2030 if successfully done.

USA Rare Earth Inc. (NASDAQ:USAR) is a domestic supplier of rare earth magnets and heavy rare earth elements and is currently developing a vertically integrated domestic supply chain for rare earth element magnet production.