7 Best Rare Earth Stocks to Buy According to Hedge Funds

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1. Cleveland-Cliffs Inc. (NYSE:CLF)

Number of Hedge Fund Holders: 52

Cleveland-Cliffs Inc. (NYSE:CLF) tops our list for being one of the best rare earth stocks.

Investing reported on January 7, 2026, that KeyBanc Capital Markets analyst Philip Gibbs downgraded CLF from Overweight to Sector Weight and removed his previous price target. The downgrade was primarily a valuation-driven decision after the stock exceeded the firm’s prior $13.00 price objective.

Gibbs noted that while the company’s strategic “bullish catalysts”- such as gaining market share in automotive contracts, strengthening liquidity, and selling non-core assets- are successfully materializing, they are now fully priced into the shares. Furthermore, the analyst expressed concern that CLF’s costs are coming in slightly higher than expected due to a “richer product mix,” leading to a more cautious outlook for the carbon sector in 2026.

Cleveland-Cliffs Inc. (NYSE:CLF) is primarily a steel producer and iron ore mining company, but it has begun strategically exploring rare earth element (REE) potential at select mine sites in the United States. This move aligns with the growing U.S. demand for domestic rare earths and critical minerals, which are essential for electric vehicles, wind turbines, defense systems, and electronics.

While we acknowledge the potential of CLF to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CLF and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 12 Best Multibagger Stocks to Buy Heading into 2026 and 7 Best Rising Tech Stocks to Buy Now.

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