Methanex Corporation’s (MEOH - Free Report) stock looks promising at the moment. The company has seen its shares pop roughly 23% so far this year.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this chemical company an intriguing choice for investors right now.
What Makes MEOH a Solid Choice?
Solid Rank & VGM Score: Methanex currently has a Zacks Rank #1 (Strong 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 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Methanex has trounced the industry over a year. The company’s shares have shot up around 50.7% over this period, compared with roughly 10.3% decline recorded by the industry. Strong demand and pricing fundamentals for methanol have contributed to the rally in Methanex’s shares.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for third-quarter 2018 for Methanex is currently pegged at $2.02, reflecting an expected year-over-year growth of 236.7%. Moreover, earnings are expected to register a 64.5% growth in 2018. The company also has an expected long-term earnings per share growth of 15%, higher than the industry average of 11.7%.
Superior Return on Equity (ROE): Methanex’s ROE of 28.6%, as compared with the industry average of 9.6%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Prospects: Methanex is benefiting from higher demand and prices 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 second quarter of 2018 and is expected to remain healthy through the balance of 2018.
Moreover, higher methanol prices are boosting the company’s revenues and margins. In the second quarter, the company’s average realized prices for methanol climbed roughly 24% year over year.
Methanex also remains on track with its plans of capitalizing on near-term growth opportunities in Chile. The company recently completed the restart of its Chile IV plant and produced first methanol from the 0.8-million ton plant that has been idle since 2007. The Argentine Government has also recently granted permits for export of natural gas from Argentina to Chile. Methanex has started receiving natural gas from Argentina.
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.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include CF Industries Holdings, Inc. (CF - Free Report) , KMG Chemicals, Inc. (KMG - Free Report) and Cabot Corporation (CBT - Free Report) .
CF Industries has an expected long-term earnings growth rate of 6% and carries a Zacks Rank #1. The company’s shares have rallied around 32% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5% and sports a Zacks Rank #2. The company’s shares are up roughly 18% over the past six months.
Cabot has an expected long-term earnings growth rate of 11% and carries a Zacks Rank #2. The company’s shares have gained around 4% over the past six months.
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