Is USA Rare Earth Stock a Once-in-a-Generation Reshoring Opportunity?

USA Rare Earth (USAR -3.96%) is a company that could play a crucial role in helping the U.S. and its allies secure critical minerals in the coming years. China currently dominates the market for extracting and processing rare-earth minerals, giving it significant leverage and the ability to limit access to these resources, which are vital for defense systems and other advanced technologies.

The U.S. and China are rival superpowers, and there is a risk that the U.S. could experience a significant reduction in access to rare-earth minerals as geopolitical tensions rise. USA Rare Earth is working to improve its domestic sourcing of rare-earth minerals and lessen its dependence on potentially unfriendly foreign governments.

Given the current trends of reshoring, could this make its stock a once-in-a-generation investment opportunity? China's dominant position in the rare-earth minerals industry is no mere speculation; it is already being employed as a political weapon. In response to U.S. tariffs and restrictions on advanced artificial intelligence (AI) chips and semiconductor manufacturing equipment, China imposed a ban on rare-earth exports in October 2025.

Subsequent negotiations led to a temporary lifting of the ban, but some Chinese firms have since canceled exports to the U.S., and exports to Japan remain heavily restricted. China has also prohibited exports of technologies and products to mining firms like USA Rare Earth and MP Materials, citing their potential military utility.

Despite the clear path to strong demand for USA Rare Earth's mining output, the company's stock has seen substantial declines this year, falling about 15% over 2026's trading and down roughly 74% from its October high. Although the stock has taken a significant hit, investors should be aware that USA Rare Earth is not a low-risk investment.

Excluding its recent acquisition of the Brazil-based mining company Serra Verde, USA Rare Earth is still essentially a pre-revenue business. The company's supply agreements with the U.S. government provide some price floor guarantees and protection, but its success may depend on securing higher prices and achieving sufficient operational efficiency in mining and processing.

However, I believe the stock offers a compelling risk-reward profile at its current valuation and also provides defensive benefits against a potential deterioration in U.S.-China relations. With a market capitalization of around $4 billion and targeting $1.8 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2030, I think there is a compelling case for risk-tolerant investors to consider adding USA Rare Earth to their portfolios at a time when the importance of securing critical minerals on the global stage is increasingly recognized.