Methanex (MX-T) revisited 4.0 top pick from Brian Madden on BNN.ca Market Call Wed Nov 3rd @ 1200ET
With a 14 per cent share of the global market, Methanex is the world’s largest producer of methanol, a product used in fuel blending and in plastics and other chemical applications. The company operates facilities in Canada, the U.S., Chile, Egypt, New Zealand and Trinidad & Tobago.
Rare among commodity producers, Methanex generates prolific free cash flow through the cycle, thanks to its efficient plants situated near abundant sources of low cost natural gas feedstock. Methanol demand and pricing is roaring back from last year’s cyclical trough, and Methanex earnings, which grew 218 per cent year over year in Q3, are roaring back alongside the commodity and are poised to grow a further 75 per cent in the current quarter. Although the shares have also recovered sharply, they trade at a modest 2.2x book value vs. their ten-year average of 2.5x and well below prior cycle peaks above 4x. |
