Apple has agreed to buy rare earth magnets from MP Materials, causing shares of the mining firm to surge over 20%. The $500 million deal includes establishing a recycling facility, positioning MP as a key player in U.S. rare earth independence, reducing reliance on China.

The AAPL deal provides long-term revenue visibility for MP, aligning with Pentagon-backed initiatives. This strategic move boosts MP’s credibility and investor confidence, potentially leading to further share price increases. However, caution is advised as MP stock is currently overvalued with a forward price-sales ratio above 36x.

The Pentagon’s $400 million investment in MP last week, making it the largest shareholder, has contributed to the mining firm’s stock gains. Despite this, Wall Street firms remain cautious due to valuation risks. The consensus rating on MP stock is a “Moderate Buy,” with a mean target indicating potential downside of up to 50% from current levels.

Read more at Yahoo Finance: MP Materials Is Surging on a $500 Million Apple Deal. Should You Buy MP Stock Here?