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Methanex Corporation (MEOH - Analyst Report) recently reported strong earnings for 2011 and there is no slowdown on the horizon for the new year. Earnings are expected to grow by the double digits in 2012. This Zacks #1 Rank (Strong Buy) is trading well under its peers with a forward P/E of 8.1. Its peers average 12.3x.

Methanex, headquartered in Vancouver, is the largest supplier of methanol in the world. It serves all major markets in Asia Pacific, North America, Europe and Latin America.

Methanex Surprised on the Fourth Quarter By 19.3%

On Jan 25, Methanex reported fourth quarter 2011 results and easily beat the Zacks Consensus by 11 cents. Earnings per share were 68 cents. That crushed the year ago period which saw just 27 cents a share.

Revenue rose 22% to $696 million from $570 million on strong volumes and a healthy methanol pricing environment.

The company maintains a conservative balance sheet. It had $351 million cash on hand as of Dec 31, 2011. The company also has access to a $200 million undrawn credit facility that was recently extended to mid-2015.

Outlook for 2012 Looks Up

Methanex was bullish about 2012. It recently announced it was restarting a second plant in New Zealand in mid-2012.

The company believed the outlook for the industry was attractive, as demand growth was expected to exceed the addition of new capacity over the next several years.

Zacks Consensus Estimate Rises for 2012

Earnings growth is expected to jump another 65.8% in 2012 after triple digit growth in 2011.

The Zacks Consensus Estimate rose to $3.41 from $3.31 in the last 30 days. That compares to 2011, which was a record year in sales volumes and which saw earnings of just $2.06.

Methanex Is a Value Stock

Like most stocks, Methanex sold off during the summer of 2011. While shares have rebounded, they have yet to re-take the 2011 highs.

With earnings estimates still rising, that has created a lot of value.

In addition to a P/E under 10, Methanex also has a price-to-book ratio of 1.7. That is below its peers, which average 2.1. A P/B ratio under 3.0 usually indicates there is value in the company.

Methanex also has other solid fundamentals including a 1-year return on equity (ROE) of 11.2%.

What global slowdown? 2012 is starting out strong for Methanex. Yet value investors are getting this company at bargain valuations.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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