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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 $71.51 on May 16, before eventually closing the day at $70.35.

The company has a market cap of roughly $5.8 billion. Average volume of shares traded in the last three months was around 730.5K. It has an expected long-term earnings per share growth rate of 15%.

Methanex’s shares have gained 23.1% in the last three months, significantly outperforming the industry’s 2.8% decline.

Driving Factors

Healthy demand and pricing fundamentals for methanol and upbeat outlook have contributed to the rally in Methanex’s shares.

Methanex is poised to gain from healthy demand fundamentals for methanol. Demand has been driven by both traditional derivatives and energy-related applications in Asia, particularly in China. Per the company, global demand for methanol increased 4% year over year in the most recent quarter and is expected to remain healthy in 2018.

Moreover, higher methanol prices are boosting the company’s revenues and margins. In the first quarter, the company’s average realized prices for methanol went up roughly 10.3% year over year while the same rose 14.9% sequentially.

The company’s profits rose around 28% year over year in the first quarter. Revenues also increased roughly 18.8% year over year to $962 million in the quarter on the back of higher prices.

Moreover, Methanex’s Chile IV plant is progressing with its restart process and is expected to be complete by third-quarter 2018. With a committed revolving credit facility, strong balance sheet and healthy cash generation capability, the company believes that it is well positioned to meet its financial commitments, execute growth opportunities and return excess cash to shareholders through dividends and share repurchases.

Methanex remains committed to boost shareholder returns by leveraging its solid liquidity position. Methanex announced a 10% hike in its quarterly dividend to 33 cents per share earlier this year. The company returned $66 million in cash to shareholders in the form of dividend and share repurchases during the first quarter. It spent $38 million to buy back roughly 650,000 shares in the first quarter.

Zacks Rank & Other Stocks to Consider

Methanex currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks worth considering in the basic materials space include The Chemours Company (CC - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and Huntsman Corporation (HUN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained 22.3% in a year.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 96.2% in a year.

Huntsman has an expected long-term earnings growth rate of 8.3%. Its shares have moved up 26.6% in a year.

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