This mining stock could soar from greater magnet demand

Neodymium magnets are all the rage, and this analyst thinks the shares could almost double.

Rainbow Rare Earths

We received a few emails asking we update our fairly recent opinion on Rainbow Rare Earths (LSE:RBW), presently trading around the 13p level. The mining company presently operates in major locations in both East and South Africa, extracting the essential elements used to produce the permanent neodymium magnets now massively in demand for modern electronics.

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Recently, by reaching 14.75p, Rainbow managed to trade higher than expected, suggesting some considerable strength may be present for longer-term price gains.

This year we're opting to play safe with trigger levels, choosing a calculation criteria which can only demand price gains if a particular level is exceeded. In the case of Rainbow, rather than exceed its previous high of 14.75p, we calculate that above 15.3p is liable to become a major trigger.

Above this should prove capable of propelling the price toward an initial 18p with secondary, if exceeded, at a longer-term 21.5p. To be fair, price closure above 18p is liable to prove game changing for the longer term as presently we can speculate on a distant 25p, a new all-time high.

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That's about the end of the good news. Then again, maybe some folk shall regard the immediate possibilities as presenting an opportunity. Weakness continuing below 13.25p suggests the probability of travel down to an initial 12p, doubtless capable of a rebound given the presence of red on the chart.

Should 12p break, we hope our secondary calculation at 10.5p shall indeed be anointed with trampoline juice, creating a price level where a future surge upward may commence.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of interactive investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.