The Sweet Smell of Methanex

Methanex (MEOH - Analyst Report) is the world's largest producer and marketer of methanol. The company is benefiting from improving fundamentals and lower costs. The company is also benefiting from declining average gas costs as well. The company has strong cash flow that drives dividend increases and stock buybacks.

The company has strong cash flow, which drives dividend increases and stock buybacks. The company continues to increase its share repurchase program and announced that the Board has approved the purchase of up to 7.9 million common shares representing about 10% of the total public float.

Methanex is currently valued at 10.2x our 2008 earnings of $2.66, which is at a sharp discount to the industry median of 14.1x. Due to improving methanol fundamentals, we believe that a revaluation of the stock is warranted, and feel the stock should trade at 13.2x our 2008 earnings. This implies a $35 target and thus a Buy rating.

Read the full analyst report on MEOH