Analyst Avinash Kant believes the mining company is "uniquely positioned" to become a "dominant low-cost supplier of critical rare earth materials." As one of the few rare earth material suppliers outside of China, Kant believes the Colorado-based company has room for growth as companies look for suppliers outside the country's export quota and wildly varying prices. The analyst expects Molycorp to "benefit significantly" from the trend of companies seeking out rare earth material sources outside China over the next four to five years.
Rare earth materials are used in many electronics including semiconductors, hybrid and electric cars, and wind turbines. Demand for the materials are expected to increase at 1 9% compound annual growth rate through 2016, according to Kant.
TheStreet Ratings team rates MOLYCORP INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about its recommendation:
"We rate MOLYCORP INC (MCP) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."