What happened
Tumbling 12% lower in January, shares of MP Materials (MP 1.91%) were hardly off to a good start in the new year. And because of a critical short-seller report coming out early in February, it seemed that the inauspicious start to 2022 showed little indication of reversing course. But that's exactly what the rare-earth metals stock did as it climbed 14.2% in February, according to data from S&P Global Market Intelligence.
Besides positive attention from Wall Street, investors decided to load up on this mining stock after its fourth-quarter earnings report and learning of an award that the company received from the Department of Defense.
So what
The first sign that thing were turning around for MP Materials last month came on Feb. 9 when Subash Chandra, an analyst at Benchmark, upgraded the stock to buy from hold and gave it a price target of $47, which represented upside of about 23% from where the stock was trading at the time. Chandra had initiated coverage on the stock in November with a hold rating and no price target.
Two weeks later, on Feb. 22, MP Materials received a $35 million award from the Department of Defense to assist in the company's development of a commercial-scale processing facility for heavy rare-earth elements at its asset, Mountain Pass. To put the significance of the award in perspective, the 2021 capital expenditures for MP Materials totaled about $124 million.
Image source: Getty Images.
Inspiring investors to pick up shares later in the month, MP Materials announced strong fourth-quarter 2021 earnings that exceeded analysts' expectations. Whereas Wall Street estimated the company would report revenue of $91.7 million and earnings per share of $0.24, MP Materials actually generated sales and EPS of $99.1 million and $0.26, respectively.
Full year 2021 was a record-setting one for the company as it sold 42,158 metric tons of rare-earth oxides, helping it to generate record revenue of $332 million. Lauding the company's performance, CEO James H. Litinsky said in the press release accompanying the results that 2021 was a banner year for "accelerated progress on our mission to restore the full rare earth supply chain to the United States."
Now what
Operating the only integrated rare-earth mining and processing site in North America, MP Materials offers a significant value proposition for investors as the U.S. seeks to shore up its supply of rare-earth minerals, which are crucial components in electric vehicles and military applications. It will certainly be worth watching to see if the company maintains the momentum it had at the end of 2021 and powers through 2022.
