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Here's Why You Should Add Methanex (MEOH) to Your Portfolio
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Methanex Corporation’s (MEOH - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this chemical maker an intriguing choice for investors right now.
What’s Working in Favor of MEOH?
Solid Rank & VGM Score: Methanex currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Methanex has outperformed the industry over a year. The company’s shares have rallied around 33.8% over this period, compared with roughly 14.1% gain recorded by the industry.
Positive Earnings Surprise History: Methanex has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 9.1%.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Methanex is currently pegged at $6.11, reflecting an expected year-over-year growth of 29.7%. The company also has an expected long-term earnings per share growth of 15%, higher than the industry average of 10.3%.
Superior Return on Equity (ROE): Methanex’s ROE of 22.7%, as compared with the industry average of 9.5%, manifests the company’s efficiency in utilizing shareholder’s funds.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Methanex is currently trading at trailing 12-month EV/EBITDA multiple of 7.9, cheaper compared with the industry average of 16.7.
Upbeat Prospects: Methanex should gain from healthy demand fundamentals for methanol. Demand has been driven by both traditional derivatives and energy-related applications in Asia, particularly in China.
Higher methanol prices should also boost the company’s margins. The company’s average realized prices for methanol jumped roughly 39% year over year in 2017 and also went up 26% in the fourth quarter. Methanex, in its fourth-quarter call, noted that methanol prices improved in the quarter and into the early 2018, supported by healthy demand and methanol supply challenges. The company expects higher average methanol prices in first-quarter 2018 on a sequential comparison basis.
Moreover, Methanex remains on track with its plans of capitalizing on near-term growth opportunities in Chile. Methanex’s Chile IV plant is progressing with its restart process and the company expects to complete the project by third-quarter 2018. The company expects production from its Chile operations to be higher on a year over year basis in 2018.
Methanex also remains committed to boost shareholder returns leveraging its solid liquidity position. The company returned $388 million in cash to shareholders in the form of dividend and share repurchases in 2017. Methanex, last month, announced a 10% hike in its quarterly dividend to 33 cents per share. The company’s board also recently approved a new share repurchase program, authorizing it to buyback up to 6,590,095 common shares.
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have rallied around 22% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 36% over a year.
Will You Make a Fortune on the Shift to Electric Cars? Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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Here's Why You Should Add Methanex (MEOH) to Your Portfolio
Methanex Corporation’s (MEOH - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this chemical maker an intriguing choice for investors right now.
What’s Working in Favor of MEOH?
Solid Rank & VGM Score: Methanex currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Methanex has outperformed the industry over a year. The company’s shares have rallied around 33.8% over this period, compared with roughly 14.1% gain recorded by the industry.
Positive Earnings Surprise History: Methanex has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 9.1%.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Methanex is currently pegged at $6.11, reflecting an expected year-over-year growth of 29.7%. The company also has an expected long-term earnings per share growth of 15%, higher than the industry average of 10.3%.
Superior Return on Equity (ROE): Methanex’s ROE of 22.7%, as compared with the industry average of 9.5%, manifests the company’s efficiency in utilizing shareholder’s funds.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Methanex is currently trading at trailing 12-month EV/EBITDA multiple of 7.9, cheaper compared with the industry average of 16.7.
Upbeat Prospects: Methanex should gain from healthy demand fundamentals for methanol. Demand has been driven by both traditional derivatives and energy-related applications in Asia, particularly in China.
Higher methanol prices should also boost the company’s margins. The company’s average realized prices for methanol jumped roughly 39% year over year in 2017 and also went up 26% in the fourth quarter. Methanex, in its fourth-quarter call, noted that methanol prices improved in the quarter and into the early 2018, supported by healthy demand and methanol supply challenges. The company expects higher average methanol prices in first-quarter 2018 on a sequential comparison basis.
Moreover, Methanex remains on track with its plans of capitalizing on near-term growth opportunities in Chile. Methanex’s Chile IV plant is progressing with its restart process and the company expects to complete the project by third-quarter 2018. The company expects production from its Chile operations to be higher on a year over year basis in 2018.
Methanex also remains committed to boost shareholder returns leveraging its solid liquidity position. The company returned $388 million in cash to shareholders in the form of dividend and share repurchases in 2017. Methanex, last month, announced a 10% hike in its quarterly dividend to 33 cents per share. The company’s board also recently approved a new share repurchase program, authorizing it to buyback up to 6,590,095 common shares.
Methanex Corporation Price and Consensus
Methanex Corporation Price and Consensus | Methanex Corporation Quote
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 52% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have rallied around 22% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 36% over a year.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>