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  • Trading rare earth stocks and investing in Lynas Corporation 3 comments
    Feb 4, 2011 7:42 PM | about stocks: LYSCFIQ, REMX

    Personally, I have owned and do own a lot of rare earth stocks. Many are trades. A few, like Lynas, are long term investments. I define a trade as a holding based on short term catalysts and an investment as supported by a long term growth story.
    What I find most odd right now, is trading on a prior event when this investment stock is loaded with catalysts in front of it in the near term (good investor call on tap (based on prior ASX announcements), first concentration from a mine outside China, Japanese Asia and European contracts in the pipe, first to positive cash flow, first to foreseeable earnings, development of the LAMP (Lynas Advanced Materials Plant), and probably first to global listing). That is a lot in the near future for Lynas.
    On the flip side, I keep waiting to sell the other rare earth stocks because the trades are reaching high valuations and there are no immediate catalysts available for most of the other stocks. Still, every time I try to close on my Moly trade something moves the stock. Today it's the government, previously it was rehashed news ect. Now, experience has taught me to ride my winners as long as it makes sense. But I also know that fundamentals will be served over the long term.
    The reality is Lynas is the best rare earth stock from a fundamental perspective AND it has the best near term catalysts in front of it at this stage. The current price is a buying opportunity. We have seen the Quarter Announcements and things look great. Nicholas Curtis should not have sold his shares at this time. But he would have to be a glutton for punishment to flip shares knowing he will lay an egg on the upcoming investor calls. He may have seen this buying opportunity coming and will reload or maybe he just was not thinking about any of this. Some of the smartest people I've met occasionally stop thinking for a moment here and there.

    But the fact remains, this stock is much closer to cash flow positive than any other. It is the richest mine, the best valuations, the clearest path to earnings, and the shortest wait. Watching each tick of a stock requires a fairly reserved mindset. I don't like to do it unless I'm planning on selling or buying. I'm adding or holding my Lynas till March. At that point I might trade some shares around a core position if March 7th looks like a sell the fact event.

    But very few stocks have multiple catalysts to support the stock even if one issue were to go poorly. Believe me the bio tech with a poor trial or a new product launch delay generally breaks a stock too much to keep it. In Lynas' case, ask yourself if any one of the current catalysts mention are delayed or fail to materialize, would you dump the story? I wouldn't. Lynas has been on time and on budget for quite a while, and I'd stick it out even if things got a little rocky. Meanwhile, I will be trading out of some of the other all promise- no hardware stories I get from my other rare earth trades.
    That's my opinion.

    Disclosure: I am long OTCPK:LYSCF, MCP, REMX.

    Additional disclosure: I rotate through several rare earth exploration projects in Australia and in the REMX

    Stocks: LYSCFIQ, REMX
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Comments (3)
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  • Metalsman75
    , contributor
    Comments (4) | Send Message
    I realize this post is over a year old. That said, I'm looking for a growth stock in my portfolio. Something I can sit on, forget about, and only peek at once, maybe twice a year.


    Currently, I work the research arena of REM's. I'm educated on them, what they do, and how incredibly important they are to technology moving the human race forward (could be argued of course).


    I have 2k of 'discretionary' monies to spend, and I'd like to invest in an area that I am closely tied to.


    Two months prior, I had considered jumping into Lynas when it was near it's all-time low of $0.85/share. Today, it is hovers around the $1.25/share mark. Still a good, undervalued stock.... in my opinion of course.


    Even with the recent request by the Malaysian people to have a judge review the 2 year, temporary working license, that could postpone the start-up of the newly built plant in June, is it still a low-mid range risk to snap up 1.5k shares?


    Thanks so much for this post. Even if it is a year old. I still found it very helpful and informative!
    23 Feb 2012, 03:48 PM Reply Like
  • chihawk
    , contributor
    Comments (2083) | Send Message
    Author’s reply » Metalsman75,
    I still believe in Lynas and will continue adding to my position. I think the current Malaysian Judicial Review is a minimal risk. Malaysia's politics has been disgusting and I have no respect for their press and politicos. I hope soon these people will be like the rats that live in the sewers of our towns. They will still be repulsive and will still be around, but they will not matter to Lynas going forward.
    I remain confident and patient and would recommend Lynas more than ever. I expect this issue to complete with little or no effect on the current timeline.
    24 Feb 2012, 11:31 PM Reply Like
  • gherzog
    , contributor
    Comments (43) | Send Message
    On the upside, Lynas has finally produced rare earth products in its Malayasian facility this past week. This is a huge milestone. But on the downside, Malaysia will have a very bitter election no later than April and the existing governments has been in power for something like 54 years.


    A change in the government could once again put Lynas into a tailspin. While the investor might consider a new government really not good for Lynas, Malaysia's government is a ruling Muslim majority that has long denied opportunities to a Chinese minority and several other minorities.. including Christians and Buddhist.


    Why is Malaysian politics to hardcore? Well, the leader of the opposition was dragged into court and forced out of what appeared to be trumped up sodomy charges some 10 years or so ago. The situation is very polarized by old wounds.
    2 Mar 2013, 11:06 AM Reply Like
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