MP, TIME TO BUY?Hello fellow traders and investors, here's another trade idea.
MP has been a very popular stock and has recently pulled back to the support area, if MP makes a recovery to the take profit area from the 28$ area it offers around a 60 to 70% ROI however from where we are right now it offers a 30 to 35% ROI. I am anticipating it going to the 28$ area.
Technicals:
The Macd indicates that it's oversold and still in a downtrend
The RSI is oversold and tends to get rejected by the trendline
The EMA's indicate that it's very close to crossing over
When To Buy:
When it indicates a reversal, the RSI has to breakout of the trendline, the Macd has to cross it's MA and the EMA's have to crossover. Make sure to wait for confirmation from each of them. I personally think MP is headed for 28$ and then followed by a recovery.
When To Sell:
I recommend selling in the take profit area.
Fundamentals: MP Materials Corp. engages in the production and marketing of rare earth specialty materials. It owns and operates Mountain Pass, an industrial asset, which is the only rare earth mining and processing site of scale in the Western Hemisphere. These rare earth materials are essential for the fabrication of electric vehicles, wind turbines, robots and much more. Now some people are probably thinking well what if we transition to hydrogen cars instead of electric cars well my answer for that is any vehicle like so pretty much needs these rare earth materials. We all know that electric cars or hydrogen cars are going to take over in the next years which means we will need more of these rare earth materials and this is where MP materials really contributes to this. They have a P/S of 44$, a debt/equity of 0.08, a sales growth Q/Q of 100%, an earnings per share growth Q/Q of 2225%, a profit margin of -16% and a short float of 6.72%
Rating: 95/100 the technicals are good and so are the fundamentals. I think it's fine that they are trading at an insane valuation because they have tremendous growth and for the profitability, I don't think it really matters because they are a very new company and if you really don't like that just to put it into prospective Tesla didn't turn profitable till like last year so all that to say it's not that big of a deal. And one of my favorite investor Chamath Palihapitiya is also personally invested. And a lot of people are getting worried about the chairman and CEO selling 155$ million dollars worth of stock however he still owns the majority of what he had and he is now still holding around 400$ million dollars worth of stock.
NOTE: I am going to look for opportunities to load up a bunch at the 28$ area.
I hope you enjoyed this quick analysis and many more to come.
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Thanks.
