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3 Leading Rare Earth Stocks to Buy in October 2023 

Rare earth stocks to buy

Rare earth metals industry generally sees a lot of volatility because commodity prices are subject to move rapidly as a result of the supply and demand fluctuations and geopolitical dynamics. The main reason for such volatility is China’s dominance in the market. Global rare earth elements market should be able to compound at ~4.19% between 2023-2028 to grow from 167.99 million tons to 206.25 million tons by 2028. High demand from emerging economies and increased dependency on “Green Technology” on rare Earth elements are expected to support some of the leading rare earth stocks. 

On the contrary, inconsistent supply of rare earth elements might act as the barrier to the market’s growth. However, the higher scandium usage in aerospace applications should be able to provide opportunities for leading rare earth stocks and global economy’s revival and resumption of industrial activities should lend support to the entire industry. Asia-Pacific continues to dominate the global market, because of increased production of rare Earth metals and higher demand from industries including consumer electronics. 

With higher investments in healthcare industry along with increased ceramic demand and production, usage of rare earth elements should increase noticeably in this region. Rare earth elements contribute total value of ~US$200 billion to Indian economy. India has world’s 5th largest reserves of rare earth elements, which is basically twice as much as Australia. Despite of this fact, the country imports most of its occasional Earth needs in finished form from China. 

Demand and production of ceramics are highest in this region. Higher ceramic demand from industries including aerospace and defense, energy, healthcare, and consumer goods should continue to support production of ceramics in Asia Pacific region.

With this in mind, let us check out some of the leading rare earth stocks which investors should buy in October 2023.

1. Sibanye Stillwater Limited

The company, together with its subsidiaries, operates as precious metals mining company in South Africa, the US, Europe, and Australia. 

ioneer Ltd announced that it has reached an agreement to develop joint venture with the company for the establishment of flagship Rhyolite Ridge Lithium-Boron Project located in Nevada, USA. As per the terms of the agreement, the company intends to make a contribution of US$490 million for 50% interest in this JV, with ioneer planning to maintain 50% interest and retain operatorship.

Financial and operating results of the company for 1H23 exhibit tough global macroeconomic and turbulent geopolitical environment that prevailed during 2023. Slowing global growth reduced the demand for commodities, leading to significant decline in commodity prices except gold during the period. 

Its adjusted EBITDA came in at R14.1 billion (US$776 million) for 1H23, which was was 37% lower as compared to adjusted EBITDA of R22.6 billion (US$1.5 billion) for comparable period in 2022. This decline was mainly because of significant fall in PGM prices and regional operational challenges, which were partly offset by improvement in performance from SA gold operations. The company was able to maintain continued capital allocation discipline which supported its strong financial position. Cash and cash equivalents came in at R22.2 billion (US$1.2 billion), staying above the capital allocation framework reserve target of R20 billion.

2. Tronox Holdings PLC

Tronox Holdings PLC is engaged in mining, manufacturing and selling titanium dioxide (TiO2) mineral sands and soda ash.

The company has released financial results for the quarter ended June 30, 2023, in which it saw revenue of $794 million, exhibiting a rise of 12% in comparison to previous quarter, or 16% decline as compared to the previous year. It saw adjusted EBITDA of $168 million, which was at the higher end of stated range, and adjusted EBITDA margin of 21.2%. 

For 3Q23, the company’s TiO2 volumes are expected to be relatively flat in comparison to 2Q23 levels. It expects Zircon volumes to decline by 15 to 20 thousand tons against 2Q23 and its adjusted EBITDA is expected in the range of $115 million-$135 million. The company strongly believes in its strategy of being vertically integrated and the type of value it provides. Because of its unique portfolio, it continues to evaluate a range of options to leverage expertise so that it can unlock value of the rare earths generated from its operations.

3. Sociedad Quimica y Minera S.A.

The company is a Chilean commodities producer having significant operations in lithium (mainly used in batteries for EVs and energy storage systems), specialty and standard potassium fertilizers, iodine (which is mainly used in X-ray contrast media), and solar salts.

Revenues for 6 months ended June 30, 2023 (1H23) touched US$4,315.6 million in comparison to US$4,618.6 million which was reported for same period of the last year. It announced earnings for 2Q23 of US$580.2 million (US$2.03 per share), exhibiting a decline of ~32% in comparison to US$859.3 million (US$3.01 per share) for 2Q22. 

Lower realized average sales prices in the company’s lithium business impacted its 2Q23 results. While lithium sales volumes exhibited a significant recovery during 2Q, touching historical high levels, lower spot prices mainly in China in the starting of 2Q had negative impact on reported sales and net income. That being said, the company is quite optimistic about the future. It expects to see positive dynamic in lithium market as a result of strong EV sales volumes in different markets and anticipates that global lithium demand growth should touch at least 20% this year.

During 2Q, the company signed several important long-term lithium supply agreements, which includes agreements with Ford Motor Company and LG Energy Solutions. It is optimistic about ability to grow its production volumes and deliver high quality lithium products to help global decarbonization efforts. 

Conclusion

Magnets which are used in EVs and wind turbines are neodymium, praseodymium, and dysprosium, and samarium and cobalt are considered as potential substitutes, which should further support leading rare earth stocks. Apart from these industries, healthcare is another industry which should support growth. Magnets are used in medical equipment, including MRI machines, pacemakers, sleep apnea machines, and insulin pumps. Healthcare industry saw significant investments in Asia-Pacific, the Middle East, and Africa.

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CEO & Editor
I'm Ved Prakash, Founder & Editor @Newsblare Media, specialised in Business and Finance niches who writes content for reputed publication such as Investing.com, Stockhouse.com, Motley Fool Singapore, etc. I'm the contributor of different... news sites that have widened my views on the current happenings in the world.

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