Q: I sold some NEO and am considering a re-buy. I like the direction NEO is taking. If the new USA administration, and the west nations as a whole, want to have economies not dependent on China then rare earth minerals should be on their radar since they are critical and currently almost all rare earths come from China. NEO is one of the few western companies, at least that I know of, that will have production of rare earths and related products that are/will be produced in the west (Estonia). I am considering a rebuy in the $7.50 range? What is your overall opinion of NEO and the rare earths in general? What other publicly traded, western, rare earth companies are there to consider?
5i Research Answer:
NEO is a decent company in the sector. It is small, and this adds some risks, but it has net cash on the balance sheet, reasonable growth expectations, a high dividend and an OK valuation. Its Q3 was good and it raised its outlook. Certainly it is in a more strategic location. The US put a 25% tariff on some incoming metals in May of this year. We would be fine seeing it as a buy for investors who understand the sector and small caps. We think the sector does have potential long term. It tends to go through 'hype' cycles, however, but the supply/demand scenario is favourable long term. MP and UUUU are larger, and also interesting.