The Best Small-Cap Stock to Buy Right Now for Explosive Long-Term Gains

By James Brumley – Apr 19, 2026 at 2:18PM ESTKey PointsSmaller companies’ values often under-reflect that organization’s long-term potential.This can be particularly true in the mining industry, which is slow-moving and capital-intensive, keeping many would-be investors on the sidelines.One particular small-cap mining company, however, seemingly offers a long-term reward that justifies the risk it poses.Most stocks in your portfolio are likely to be large caps, and understandably so. Due to their sheer size, you're familiar with them and their underlying companies. As the saying goes, though, good things come in small packages. If you're willing to take on some risk in exchange for significant upside potential, consider buying a stake in USA Rare Earth (USAR +8.36%). What is USA Rare Earth? It's not exactly a household name. In fact, with a market cap of less than $4 billion, there's a good chance you've never even heard of it. Image source: Getty Images. Don't be fooled by its small size or lack of notoriety, though. USA Rare Earth packs a powerful, appropriately sized punch. See, this rare earth metal and mineral miner is sitting on a deposit in Sierra Blanca, Texas, that, as of 2019, was conservatively expected to be capable of producing 20,000 tons worth of valuable rare earth elements (rare earths are used in electronics, electric vehicles, wind turbines, and more) every day for 20 years. That same study from Texas Mineral Resource, however, also suggested there was enough material at the west Texas site -- called Round Top -- to potentially yield marketable elements for over 100 years. Money-wise, at current prices, the mine could produce more than $100 million in annual rare-earth element revenue, plus on the order of another $200 million in yearly aluminum and lithium production, the latter used in EV batteries. In the meantime, the company is finalizing construction of a neo-magnet facility in Stillwater, Oklahoma, with production expected to start sometime before the middle of this year. At maximum capacity, this factory -- which makes high-strength industrial magnets out of the aforementioned rare-earth metals -- will be able to manufacture up to 5,000 tons of these critical magnets per year, putting the company in a market that IMARC Group believes is worth $20 billion per year now, en route to more than $30 billion by 2034. Importantly, USA Rare Earth will help wean the United States from dependence on China for rare-earth elements and rare-earth magnets. ExpandNASDAQ: USARUSA Rare EarthToday's Change(8.36%) $1.54Current Price$19.97Key Data PointsMarket Cap$4.3BDay's Range$19.23 - $20.8752wk Range$8.00 - $43.98Volume451KAvg Vol19MGross Margin-8466.22% The potential reward is equal to the risk It sounds like a no-brainer: a $4 billion company sitting on a considerably greater value of critical industrial metals and minerals. Just don't lose perspective on the matter. There are no guarantees that the amount of useful material expected to be in the mountain at Round Top is actually there. And even if it is there, mining is rarely cheap and never easy. Unexpected and expensive challenges are often encountered. Such risk can often be more than worth the reward, though. And in this instance, with the amount of geological surveying work that's already been done, paired with the growing need for a domestic supply of rare-earth magnets, the odds of USA Rare Earth's success appear to be above average as well. It's just going to take years to do all the (literal) digging that needs to be done here for the big payoff. This might help in the meantime: While obviously speculative in the near-term and long run, analysts' current consensus 12-month price target of $32.25 is nearly twice the stock's current price.Read NextApr 19, 2026 •By Steven PorrelloShould You Buy USA Rare Earth While It's Below $20?Apr 17, 2026 •By Steven PorrelloHere's Why I Wouldn't Touch USA Rare Earth With a 10‑Foot Pole in This Critical‑Minerals Arms RaceApr 17, 2026 •By Thomas NielForget USA Rare Earth: Why Trump's Bet on This Critical Minerals Play Could Backfire for InvestorsApr 3, 2026 •By Lee SamahaHere's Why USA Rare Earth Stock Crashed in MarchApr 2, 2026 •By Justin PopeIs USA Rare Earth Stock a Buy Now?Mar 30, 2026 •By Scott LevineWhy USA Rare Earth Stock Crashed TodayAbout the AuthorJames Brumley is a contributing Motley Fool stock market analyst covering consumer staples and consumer discretionary stocks. James is a former licensed stockbroker with Charles Schwab, and a registered investment adviser. He holds a bachelor’s degree in business management with a specialization in finance from Transylvania University.TMFjbrumleyX@jbrumleyStocks MentionedUSA Rare EarthNASDAQ: USAR$19.95(+8.25%)+$1.52*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.