Methanex Corp (USA) (NASDAQ:MEOH)

high volume

Barron's Roundtable 2011 - Scott Black's pick

Scott Black. Enterprise value was $413 a ton in early december. Replacement cost is $700 a ton, so the stock is selling at a huge discount.

yes sir. Capital and Crisis pick. Lets see how she goes.

P.A.Y.D.

Current Price vs 52 wk high 21%

ROE vs Industry 336%

ROE vs 5yr 108%

ROI vs Industry 111%

ROA vs Industry 113%

P/E vs Industry 24%

P/CF vs Industry 17%

Debt/Equity vs Industry 62%

Net Profit Margin vs Industry 212%

MEOH is a supplier of methanol to most major international markets. In 2007 its total sales represented about 17% of the global demand.

I am suspicious that MEOH essentially trades as a commodity. Using monthly numbers, I correlated MEOH’s beginning of the month stock price with the monthly contract price per gallon of methanol since May 2001; that correlation was .83. The contract price per gallon in February 2009 is nearly the same it was in 2001 (70¢ vs. 77¢). The high for methanol was $2.50 in Dec/Jan a year ago. There is still some downside risk, but I think it will be short-lived and could provide the opportunity to add to my position.

Based on the fundamentals, MEOH is a solid buy. As I write this, the price is $7.14, the P/E is 1.9, the yield is 8.4% and the book value is $13.96 (nearly twice the price, and the intangibles are nil). Since 2000, the EPS has grown 340%, which translates into a compounded annually 24% growth rate. The ROE has exceeded 15% for the past four years, and exceeded 25% the last two. The company has had positive free cash flow since 2000.

I look at three indicators of fiscal soundness: the Altman Z is at 3.46, anything above 3 indicates that there is little risk of bankruptcy; the Piotroski F is at 6, short of the goal of 8 or 9, though well above the dangerous 2 or below; and the Sloan accrual is at -.23, -5 or lower is the goal, but anything negative is still regarded as a good sign.

I look at four valuation estimates. The two I usually give the greatest weight are very close. My Discounted Cash Flow estimated share value is $42.13 which gives me a margin of safety (MOS) of 83%. My estimate based on earning growth (discounted to reflect a desire of at least 15% annual growth) was $42.97 which also gives an 83% MOS. My estimate based on sustainable growth (discounted to reflect a desired 15% annual growth) was $13.85 and only a 48% MOS. The fourth method is based on Graham intrinsic value, and that estimate was $142.80 with a 95% MOS. All four methods indicate that MEOH is severely undervalued.

Low valuation, huge growth prospects. Dividend is also pretty high.

Near 52 week low

Price target $ 38 juli 2009

As with all my picks: A very attractive P/E, excellent EPS growth rate and high five year growth prospects.

Good Dividend...which increased. A buyback program and a low P/E. Doesn't seem to catch anyones interest...but when the company hits the radar screens I think the fuse could be ignited.

good management, 17% of world market?methanol up. volatile short term maybe. outperform sector long term.

Today's highest gainer is next week's biggest loser

Fundamentals. Price of Methanol is high. Management is good. Company is generating cash. Reducing count of shares.

Full Methanex Analysis:
http://solidstocks.blogspot.com/2008/03/methanex-turns-methanol-into-cash.htm

Excerpt: "Methanex has a trailing operating cash flow multiple under 6 and a trailing free cash flow multiple under 7 when excluding Egypt costs... Methanex is a buy for investors focused on long-term share price appreciation because of its strong fundamentals and cash flow generation ability."

No moat ... and at risk to competitors with more secure gas supply (at lower prices). Huge capacity additions coming in the middle east.

recommended from a friend(burney- works for a financial company) on earnings tommorow

Reeks of buyout with high cash, low debt, low PCF and low PFCF. Good underlying fundamentals even without the prospect of a buyout. As an aside, the US isn't the only market for MTBE