Tronox Holdings (TROX) has moved into focus after management highlighted progress on rare earth supply chain plans supported by potential financing of up to US$600 million, alongside cost programs and rising TiO2 volumes.

The rare earth plans and cost savings story are landing at a time when Tronox’s share price has rallied, with an 80.35% 90 day share price return and a 67.68% year to date share price return from a low base, even though the 1 year total shareholder return is slightly negative and longer term total shareholder returns over three and five years remain deeply negative.

If this rare earth supply chain news has your attention, it could be a good moment to look across the sector and see what else screens well among 30 best rare earth metal stocks.

With Tronox trading around US$7.16 after a sharp recent run, yet still carrying heavy losses and mixed long term returns, the key question is simple: is this rare earth story still mispriced, or is the market already banking on future growth?

Most Popular Narrative: 17.2% Overvalued

With Tronox at $7.16 and the most followed narrative putting fair value closer to $6.11, the rare earth and TiO2 story is being priced quite fully.

Rare earth and other specialty mineral side streams present incremental, higher margin growth avenues; Tronox is actively progressing partnerships and government funding efforts for these initiatives, which could diversify revenue streams and further boost earnings as new projects come online.

Curious how a loss making chemicals producer commands this valuation? The narrative leans on measured revenue growth, slimmer but positive margins, and a future earnings multiple that assumes solid execution. Want to see how those pieces fit together in the model?

Result: Fair Value of $6.11 (OVERVALUED)

However, there are still clear pressure points, including Tronox’s high net leverage of 6.1x on about US$2.9b of net debt, as well as ongoing regulatory and environmental cost headwinds.

Next Steps

If this mix of rare earth potential and balance sheet pressure feels finely balanced, it is worth checking the numbers for yourself and forming a view quickly, starting with 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.