Bruce Campbell loves this Canadian tech stock

Bruce Campbell, president and portfolio manager at Stonecastle Investment Management, says Neo Performance Materials (Neo Performance Materials Stock Quote, Chart, News, Analysts, Financials TSX:NEO) is benefiting from shifting global supply chains in the rare earth sector.

Speaking on BNN Bloomberg’s Market Call on March 9, Campbell said Neo stands out as a Canadian rare earth materials company at a time when supply chains remain heavily associated with China.

“It is a Canadian company,” Campbell said. “They actually did some work in China before, and now they’re starting, especially with what China’s done on the rare earth side, to move that production to other areas.”

Neo has produced magnets used in electric motors for roughly three decades, a market Campbell said continues to expand as electrification and advanced manufacturing grow.

“They’ve been producing magnets for motors for 30 years now, and of course that’s a bigger and bigger area of our economy,” he said, adding that the company also processes a range of other rare earth materials.

Campbell said the company has been delivering steady earnings growth while still trading at a valuation discount relative to peers.

“They trade at a discount to a lot of their peers,” he said.

He also pointed to improving institutional interest.

“We’ve seen institutional ownership continue to pick up, especially now that they’ve crossed that billion-dollar market cap area and have more attention on them than they have in the past,” Campbell said.

Shares of Neo Performance Materials have gained about 196% over the past 12 months and 19.8% over the past five years. Among analysts covering the stock, four rate it “Buy,” none rate it “Hold” or “Sell,” with a consensus price target of $27.65.

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