USA Rare Earth, Inc. USAR shares have surged 73.5% over the past year, outperforming the industry and the S&P 500, which have returned 41.8% and 26%, respectively. The company is gaining from the launch of its commercial magnet production line and strategic acquisitions aimed at strengthening its rare earth operations. It is also benefiting from government-backed funding and expansion initiatives that support the development of a domestic rare earth supply chain.

In contrast, the company’s peers like BHP Group Limited BHP and MP Materials MP have gained 64.5% and 111.5%, respectively, over the same time frame.

USAR Outperforms Industry & S&P 500

Image Source: Zacks Investment ResearchClosing at $22.21 in the last trading session, the stock is trading below its 52-week high of $43.98 but higher than its 52-week low of $9.32. The stock is trading above its 200-day moving average but slightly below its 50-day moving average, indicating that the long-term trend remains positive despite some near-term weakness.

USAR Stock’s 50-Day & 200-Day Moving Averages

 

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Let’s take a look at USAR’s fundamentals to better analyze how to play the stock.

Growth Drivers for USAR Stock

The successful commissioning of Phase 1a of USAR’s commercial magnet production line at its Stillwater, OK, facility marks an important step in its growth strategy and allows it to begin supplying sintered NdFeB permanent magnets to customers in the second quarter of 2026.The commissioning highlights the company’s capability to operate a complex rare earth magnet manufacturing process at a commercial scale. At its Stillwater facility, USAR transforms rare earth materials into high-performance NdFeB permanent magnets through a series of production steps, serving end markets such as defense, aerospace and automotive.Phase 1a is expected to achieve an annual production run rate of 600 metric tons by the end of 2026, while the planned Phase 1b expansion is projected to double total capacity to 1,200 metric tons annually by the first quarter of 2027. Once fully operational, Stillwater is expected to be among the first large-scale NdFeB magnet manufacturing facilities in the United States, supporting a more resilient domestic rare earth supply chain.USAR has strengthened its growth strategy through a combination of financing and acquisitions. In June 2026, the company secured access to up to $1.6 billion in government-backed funding under the CHIPS Program from the U.S. Department of Commerce. The package includes up to $277 million in federal funding and up to $1.3 billion in loan support as the company advances key development milestones.In May 2026, USA Rare Earth secured a $14.2 million grant from the Texas Semiconductor Innovation Fund to boost the development of its Round Top Mountain rare earth project in West Texas, aimed at supporting domestic supply chains for critical minerals used in defense, semiconductors, AI and advanced technologies.In January 2026, the company completed a $1.5 billion PIPE financing to fund upgrades at the Stillwater facility, expand magnet finishing operations and complete Line 1b, increasing planned NdFeB magnet production capacity to roughly 1,200 metric tons.Also, in March 2026, USAR agreed to acquire Texas Mineral Resources Corp. in an all-stock transaction valued at approximately $73 million, giving it full ownership of the Round Top Project. The company expects commercial production at Round Top to begin in 2028, with a long-term goal of processing nearly 40,000 metric tons of rare earth and critical mineral feedstock per day by 2030. The November 2025 acquisition of Less Common Metals is expected to provide critical metal and alloy feedstock for the Stillwater plant.Despite these growth initiatives, USAR remains in the early stages of commercialization and is continuing to incur losses as it scales its business. While the acquisition of Less Common Metals has started contributing to revenues, profitability remains under pressure from higher operating expenses associated with expansion efforts, acquisitions and workforce additions.In the first quarter of 2026, selling, general and administrative expenses increased significantly to $21.2 million from $7 million in the prior-year period, driven by higher legal, consulting and personnel-related costs. Research and development expenses also rose to $14.2 million from $1.7 million a year ago, reflecting increased investment in product development and growth initiatives.USAR operates in the mineral exploration and mining markets, which include major industry players like BHP Group and MP Materials.

USAR’s Estimate Revisions

The Zacks Consensus Estimate for USAR’s bottom line for 2026 has decreased in the past 60 days.

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Valuation

From a valuation standpoint, USA Rare Earth is trading at a forward price-to-earnings ratio of a negative 65.94X against the industry average of 14.73X. In comparison, BHP Group and MP Materials are trading at 15.46X and 156.66X, respectively.

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Final Take

USAR is benefiting from the commissioning of its commercial magnet production line, strategic acquisitions and investments aimed at establishing a fully integrated domestic rare earth supply chain. The acquisitions of Less Common Metals and Texas Mineral Resources are expected to strengthen its long-term growth prospects.However, the company remains in the early stages of commercialization and continues to report losses as it invests heavily in expansion and growth initiatives. Rising operating and research and development expenses are likely to weigh on near-term profitability, making the stock less attractive at present. Holding on to this Zacks Rank #4 (Sell) company at present does not seem prudent. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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