American Resources Corporation (AREC): A Bull Case Theory 

We came across a bullish thesis on American Resources Corporation on Value investing subreddit by vek999. In this article, we will summarize the bulls’ thesis on AREC. American Resources Corporation’s share was trading at $3.7000 as of January 29th. AREC’s trailing and forward P/E were 0.16 and 2.75 respectively according to Yahoo Finance.

American Resources Corporation engages in the production of rare earth and critical mineral concentrates for the infrastructure and electrification markets and presents a high-risk, high-reward investment opportunity centered on its subsidiary ReElement Technologies, which has developed a proprietary chromatography-based process for rare earth element (REE) separation. Unlike traditional solvent extraction methods, ReElement’s technology dramatically reduces waste by 80%, eliminates wastewater discharge, uses 25% less processing water, and consumes 75% less energy, positioning the company as a circular economy and environmental remediation play.

The company recently gained a significant catalyst through a $1.4 billion partnership with the U.S. Department of War’s Office of Strategic Capital, including $80 million in loans to ReElement matched by private capital. The initiative aims to scale domestic NdFeB magnet production to 10,000 metric tonnes annually, reducing U.S. dependence on China, which currently dominates 90% of global rare earth processing.

AREC’s investment case is strengthened by its strategic geopolitical positioning, established partnerships, and competitive cost advantage, as ReElement can supply rare earths significantly below the Department of Defense’s guaranteed floor price. Additional upside optionality exists through Turkey’s rare earth reserve, where ReElement’s technology could enable international supply and validate its process at scale. Long-term contracts with Vulcan Elements, POSCO International, and Energy Fuels further support the growth thesis.

However, the company faces material risks. AREC’s financial health is weak, with negative equity, high debt, minimal cash, and collapsing revenue. Execution risk remains as the OSC partnership is pending final diligence, scaling the technology is unproven, and shareholder dilution is possible through government warrants. Market volatility is high, and success depends entirely on commercial-scale performance of ReElement’s chromatography process.

AREC is effectively an option on successful execution of government and international partnerships, technology validation, and scaling, offering asymmetric upside for investors willing to tolerate significant near-term risk.

Previously we covered a bullish thesis on Alpha Metallurgical Resources, Inc. (AMR) by Hugo Navarro in January 2025, which highlighted the company’s focus on shareholder returns and resilience amid coal market volatility. The stock has appreciated approximately 13.36% since our coverage. The thesis still stands. vek999 shares a similar but emphasizes AREC’s high-risk, high-reward rare earth technology and government partnerships.

American Resources Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 1 hedge fund portfolios held AREC at the end of the second quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of AREC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AREC and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.