Why Molycorp Inc's Shares Popped

Why Molycorp Inc's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Molycorp jumped 12% today after an analyst upgraded the stock.

So what: Analyst Avinash Kant at DA Davidson thinks the company is "uniquely positioned" to become a dominant supplier in rare earth materials, and raised their price target for the stock from $6 to $8. It's one of the only companies mining a significant amount of rare earth minerals outside of China, and offers supply to sometimes volatile exports from the country.

Now what: It's true that Molycorp is one of the only ways to play rare earths right now, but the company is also losing money hand over fist. It's created problems by flooding the market, and rare earth prices have dropped as a result. What Kant points to today was also true a year ago, but I think the challenges facing Molycorp are too much to bet on right now. It's simply not a stable business long term, as I've been saying for the last three years.

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The article Why Molycorp Inc's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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