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Should Value Investors Buy Methanex (MEOH) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Methanex (MEOH - Free Report) . MEOH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors should also recognize that MEOH has a P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. MEOH's current P/B looks attractive when compared to its industry's average P/B of 1.86. Over the past 12 months, MEOH's P/B has been as high as 1.56 and as low as 1.13, with a median of 1.28.

Finally, we should also recognize that MEOH has a P/CF ratio of 5.55. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MEOH's P/CF compares to its industry's average P/CF of 8.31. Over the past year, MEOH's P/CF has been as high as 5.84 and as low as 4, with a median of 4.83.

Value investors will likely look at more than just these metrics, but the above data helps show that Methanex is likely undervalued currently. And when considering the strength of its earnings outlook, MEOH sticks out at as one of the market's strongest value stocks.

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