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Methanex (MEOH) Hits New 52-Week High: What's Driving It?

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Shares of Methanex Corporation (MEOH - Free Report) scaled a fresh 52-week high of $67.80 on Apr 12, before closing the day at $66.90.

The company has a market cap of roughly $5.5 billion. Average volume of shares traded in the last three months is around 745.8K. It has an expected long-term EPS growth rate of 15%.

Methanex’s shares have gained 9.2% in the last three months, significantly outperforming the industry’s 12.6% decline.


 

Driving Factors

Forecast-topping fourth-quarter 2017 earnings performance, expectations of a strong first quarter and healthy demand and pricing fundamentals for methanol have contributed to the rally in Methanex’s shares.

The company’s net profit jumped nearly three-folds in the fourth quarter to $68 million or 81 cents from $24 million or 28 cents a year ago, while adjusted earnings of $1.70 per share surpassed the Zacks Consensus Estimate of $1.19.

Methanex is likely to gain from healthy demand fundamentals for methanol, which is driven by both traditional derivatives and energy-related applications in Asia, particularly in China.

Moreover, higher methanol prices are likely to boost its margins. Last year, the company’s average realized prices for methanol jumped roughly 39% year over year, while the same rose 26% in the fourth quarter. Methanex noted that methanol prices improved in the fourth quarter and in early 2018, supported by methanol supply challenges and healthy demand.  Sequentially, the company expects higher average methanol prices in first-quarter 2018.

Methanex is also committed to boost shareholder returns by leveraging its solid liquidity position. The company returned $388 million in cash to shareholders in the form of dividend and share repurchases last year.

The company has a long track record of returning excess cash to shareholders. It announced a 10% hike in its quarterly dividend to 33 cents per share in February 2018. Methanex’s board also approved a new share repurchase program authorizing it to buyback up to 6,590,095 common shares starting Mar 13, 2018.

Zacks Rank & Other Stocks to Consider

Methanex currently sports a Zacks Rank #1 (Strong Buy).

Some other stocks worth considering in the basic materials space are ArcelorMittal (MT - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and United States Steel Corporation (X - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has an expected long-term earnings growth rate of 13.4%. Its shares have gained 46.4% over a year.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have rallied 37% over a year.

U.S. Steel has an expected long-term earnings growth rate of 8%. Its shares have soared 22% over the past six months.

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