Key Points
The closure of the Strait of Hormuz is likely to have many countries looking to shore up their domestic industries.
MP Materials is the only at-scale producer of rare-earth minerals in the U.S., and it is getting serious support from Uncle Sam.
Cameco is the premier uranium miner for a world looking to move away from fossil fuels and toward an atomic future.
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The war between Iran, Israel, and the United States and the subsequent closure of the Strait of Hormuz laid bare the fragility of modern shipping infrastructure.
When Iran closed the strait, it cut off 25% of all the world's energy imports. Large quantities of fertilizer, industrial chemicals, livestock feed, helium, and minerals like sulfur and aluminum move through it as well.
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No matter how or when the war comes to an end, we'll be left in a brave new world where open sea lanes can't be taken for granted. MP Materials (NYSE: MP) and Cameco (NYSE: CCJ) are some of the best ways to play the era being ushered in by the Iran war.
Image source: Getty Images.
I like my earth rare
Rare-earth minerals are a selection of metals the modern world is built on. Everything from smartphones to missile guidance systems and from wind turbines to electric motors requires one or more of them.
And there's only one company in the United States producing them at scale: Las Vegas' MP Materials. While relatively few rare-earth minerals pass through the Strait of Hormuz, China currently dominates global production and has the largest reserves.
That presents a strategic risk that the U.S. government is keenly aware of. That's why last year, the U.S. Department of Defense entered into an investment agreement with MP Materials that saw the government buy $400 million worth of MP Materials' shares and aided the company in securing a $1 billion loan to expand its operations.
Critically, the deal also creates a 10-year, $110 price floor for MP Materials' neodymium and praseodymium, which will prevent MP Materials from being undercut in price by its Chinese competitors while it builds up its mining and refining capabilities.
The deal likely contributed to MP Materials bucking its two-year revenue shrinkage and growing its revenue by 10.1% for 2025 over 2024. The company is not profitable, but the support from Uncle Sam allows it to maintain a very healthy balance sheet, with a debt-to-equity ratio of 0.51.
MP Materials has surged 22.3% year to date. Given how important its products are for the United States strategically and how beneficial it would be for as many rare-earth minerals to be produced domestically as possible, I don't think MP's growth will be slowing anytime soon.
Fuel for a brave new world
The United States doesn't import much, if any, oil or natural gas through the Strait of Hormuz. However, oil is traded globally, so the price increase following the closure of the strait has caused prices at the pump to increase in America.
Even before the closure of the strait, though, the United States and several other countries were looking to move away from oil and gas and toward nuclear energy. That's best evidenced by the Department of Energy setting a goal to triple America's nuclear output by 2050. Around the world, there are 75 reactors under construction, with another 120 planned.
All those reactors do and will need uranium to run. And Canada's Cameco will likely be the one providing it to the reactors in America, Europe, and the Western-aligned world.
Cameco is the world's second-largest uranium miner by production behind only Kazakhstan's Kazatomprom. It was responsible for 15% of all the uranium produced globally last year.
2025 also saw Cameco's revenue grow 11% over 2024 and its earnings per share (EPS) surge 237% over the same period. It maintains an incredibly healthy debt-to-equity ratio of 0.14 and a solid profit margin of 16.93%.
Cameco's secret sauce relies on two ingredients.
First, the company operates some incredibly high-grade mines in Canada. McArthur River is the world's largest high-grade uranium mine with an average grade of 6.48%, and Cigar Lake has an even higher grade of 16.3%.
All the uranium in Kazakhstan by comparison has an average grade of less than 1%. So it takes more refining to be turned into usable nuclear fuel.
Second, Cameco is present through almost the entire nuclear fuel cycle. Not only does it mine uranium, it refines it and produces finished fuel rods.
And, through a joint venture with Brookfield Asset Management, Cameco owns 49% of engineering company Westinghouse. Westinghouse is behind the AP1000, which is the most advanced nuclear reactor on the market today.
It's entirely possible Cameco's own uranium fuel is going into Westinghouse reactors around the world that Cameco itself also profited from. That's highly likely to be the case in India, which has selected six AP1000 reactors. The country also signed a $1.9 billion supply agreement with Cameco that will see the miner provide India with 22 million pounds of uranium ore from 2027 to 2035.
So, Cameco is the only major uranium producer that isn't owned by either Russia or Kazakhstan, and it uniquely profits from nearly every step in the nuclear fuel cycle. I anticipate a lot of business will flow its way as countries look to secure independence from Persian Gulf energy exports.
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James Hires has positions in Cameco. The Motley Fool has positions in and recommends Brookfield Asset Management and Cameco. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
