This Rare Earths Stock Gained 108% in 2025. Should You Keep Buying It for the New Year?

Industry Overview - Rare earths are gaining attention as supply chain control is now a significant factor driving investment, with China controlling nearly 70% of global rare earth mining and about 90% of processing, impacting markets even with minor delays [1] - China's decision to delay new rare earth export restrictions for a year provides a temporary opportunity for the U.S. and allies to develop alternative sources more rapidly [1] Company Performance - Neo Performance Materials (NOPMF) has emerged as a key player in the rare earth market, showing a year-to-date gain of 108%, prompting investor interest in non-Chinese exposure as 2026 approaches [2] - NOPMF has a market capitalization of approximately $480.5 million and offers a modest forward annual dividend of $0.29, translating to a yield of about 2.51% [3] - As of December 30, NOPMF is trading at $11.75, despite a 19% decline over the past three months and a 5% drop in the last month, while still maintaining a 108% increase year-to-date [4] Valuation Metrics - NOPMF's current valuation reflects higher expectations, trading at a forward P/E of 26.25x compared to a sector median of 17.75x, indicating a premium for its rare earth leverage and earnings momentum [5] Earnings Report Insights - The latest earnings report for the quarter ending September 25 shows an EPS of $0.19, exceeding the consensus of $0.15, resulting in a positive surprise of 26.67% [6] - Q3 2025 revenue reached $122.2 million, up from $111.3 million year-over-year, with year-to-date sales increasing to $358.5 million from $340.9 million, indicating steady demand for high-value products [6] - The company reported an adjusted EPS of $0.20 for Q3 2025, significantly up from $0.03 a year earlier, with YTD adjusted EPS climbing to $0.48 from $0.16, contributing to an adjusted EBITDA of $19.2 million for Q3 and $55.3 million for the first nine months, with margins of 15.7% for the quarter and 15.4% YTD [7]