Lynas has been on my radar for a few months now, I’ve traded in and out a few times, all profitable so far. Moving forward this stock will sit in within my long-term plays. Why ? Lynas makes stuff, it makes money, and its moat (damn I hate that term, what are companies? Castles or money-making machines?) is wider than the Pacific Ocean.
LYC is the only source of ‘heavy rare earths’ outside of China. Rare earths are critical requirements for tech and weapon uses. The Pentagon and the US military have identified securing rare earths as of national importance. As a result, the US DoD (Department of Defence) has signed the contract with LYC for phase 1 of a heavy rare earth separation facility to be built in the Texas. Not only does LYC process these critical minerals, but they mine them too.
Performance/Historical/Future
Morningstar forecast earnings look very positive. If LYC can’t make money in this political environment, they never will.
Rising solid volume supporting the recent gapping uptrend. Falling volume in the last few days may provide our entry point suggestion to occur soon.
Entry Point
$2.25
LYC following the ASX rise today, falling volume last week may indicate a correction in the near future if ASX200 (purple line on chart below) falls. As at writing ASX200 up 2% solid. Long term, buying today won’t hurt, but with such a volatile market, and that I don’t expect any news to precede LYC reporting date allowing entry opportunities in the near future for those that like a bargain. Or if you’re a broker, just buy the stock for your clients regardless of trend, volume, macro/micro, price or any other core element of trading like you always do.
Summary:
Solid fundamentals backed by upward trending stock with very few competitors in the world and a growing political appetite for rare earth minerals. Buy Buy Buy…
Considerations:
- Does Biden know where China is let alone what rare earths are? Might be an issue for LYC if he steals the election from our favourite president of all time… DJT !!! MLGA – Make Lynas Great Again 😊
- Will HSBC’s 23% holding of LYC back from more extensive lucrative US/EU military contracts?
- Will the Australian Government continue to step up for LYC and promote them here an in Washington? (considering that our PM has a history of being hung up on by DJT, we will have to rely on our Govt officials sending LinkedIn messages to the senior officials they have relationships with (read interns).
- How is your portfolio positioned for an increase in US China political tensions, let alone a Cold War 2.0?
References:
Boost for US rare earths as Lynas signs contract for separation facility
U.S. Army will fund rare earths plant for weapons development
Morning Star Premium
Defence minister says still too few sources of rare earths
