Rheinmetall, Hensoldt, Almonty Industries, MP Materials – Exaggerated reactions

Rheinmetall – Overreaction to peace plan

Is lasting peace coming to Ukraine? The mere publication of a 28-point agreement drafted by the US government triggered a sell-off of German defense stocks. Ukrainian President Volodymyr Zelenskyy expressed his willingness to engage in talks, but rejected the draft. Ukraine needs "real peace" on terms that protect its sovereignty and independence, he emphasized on Telegram. Both sides had agreed to further examine the proposals. However, a breakthrough is still a long way off.

The market reaction was severe. The European industry index plummeted 2.6% to its lowest level since early September. RENK lost over 10%, sliding for the sixth day in a row. Hensoldt and Rheinmetall each fell by more than 7.5%.

However, analysts warn against jumping to conclusions. Citigroup expert Charles Armitage considers the actual prospects for peace to be slim. He believes the positions are hardly compatible and that a ceasefire would merely usher in "a phase of mutual observation." Russia could also be fully capable of conflict with Europe again "within five years."

JPMorgan, on the other hand, considers the setback an "attractive entry point." The US plan is hardly acceptable to Ukraine or its European partners. If it were to be implemented nonetheless, which the bank considers unlikely, it would amount to a strategic success for Russia and would cause Europe's defense spending to rise even more sharply. Analyst David Perry also expects the war to "unfortunately continue well into 2026 or longer."

Almonty Industries – Significant discrepancy with company performance

Almonty shares have consolidated by around 50% since their peak on October 15 of the current stock market year. The preliminary agreement between China and the United States, on the one hand, and the ongoing general market correction, on the other, have caused the share price of the future largest tungsten producer in the West to falter.

However, this does not reflect the fundamental development of the Canadian company in the slightest. In the current fiscal year, CEO Lewis Black's team plans to launch the Sangdong mine in South Korea, which is essential for the tungsten supply of the Western world. The flagship project is already considered the most important Western tungsten project outside China. At full production capacity, it is expected to cover over 80% of Western non-Chinese production.

In addition, Almonty has entered into a binding agreement to acquire the Gentung Browns Lake tungsten project in the US state of Montana. The project is located in a traditional tungsten mining area that previously made a significant contribution to the US strategic reserves. Production could start there as early as the second half of 2026. With this step into the US market, Almonty is strengthening its role as the most important Western producer of tungsten concentrate.

Several analyst firms have spoken out and see enormous upside potential in Almonty shares. After Oppenheimer had already assigned the Canadians a price target of CAD 12, Cantor Fitzgerald is now following suit. The experts have once again rated the tungsten producer as a "Buy" and set the fair value of the share at CAD 14. In Friday trading, the stock was listed at CAD 7.85. From the analysts' point of view, this is significantly undervalued.

MP Materials – Analysts optimistic

The US mining and processing company based in California is considered one of the greatest hopes for breaking China's quasi-monopoly in the rare earths sector with its Mountain Pass mine. Following the trade deal between China and the US and the temporary suspension of export restrictions, MP's share price halved to its current level of USD 56, similar to Almonty. However, analysts also expect a long-term upward trend here.

US investment bank Goldman Sachs is particularly bullish and recommends buying the stock. With a price target of USD 77, analyst Brian Lee sees over 30% upside potential within the next twelve months. MP is the largest producer of rare earths in the Western Hemisphere and, with its focus on neodymium-praseodymium oxide, plays a key role in magnet production for electronics, e-mobility, and defense technologies. Goldman Sachs is convinced by the ongoing vertical integration.

Through its expansion into refining and magnet manufacturing, accelerated by a partnership with the US government, MP Materials is strategically positioning itself as an indispensable part of the Western supply chain. Given China's 90-95% dominance in these areas, Lee considers the establishment of US production facilities to be highly relevant both geopolitically and economically.

A key element is the long-term contract with the US Department of Defense. MP Materials will receive a guaranteed minimum price of USD 110 per kilogram of neodymium-praseodymium oxide over ten years, including participation in potential price increases. For Goldman Sachs, this not only significantly reduces commodity risk but also creates "guaranteed minimum prices with unlimited upside potential."

After months of upward movement, the markets are correcting, creating long-term entry opportunities for many companies. Analysts see great potential for MP Materials and Almonty Industries after the consolidation. Rheinmetall is also likely to continue to benefit from rearmament despite the peace plan in Ukraine.