Why Methanex Stock is Still a Good Buy Today - InvestingChannel

Why Methanex Stock is Still a Good Buy Today

Methanex (TSX:MX)(NASDAQ:MEOH) is a Vancouver-based company that produces and supplies methanol in North America, Europe, the Asia Pacific, and South America. Shares of Methanex were down 1.93% in late afternoon trading on May 27. However, the stock has climbed 26% over the past three months.

The company released its first quarter 2020 results on May 5. Like other industries, the COVID-19 pandemic has had a negative impact on methanol demand. It declined 7% in the first quarter due to the crisis. Methanex reported adjusted EBITDA that was mostly flat from the fourth quarter of 2019. This was largely due to a higher average realized price, while lower sales offset this increase.

Management said that it expects demand to continue to be lower in the second quarter. This is due to the impact of COVID-19 and because of lower oil prices. On the plus side, oil prices have significantly rebounded after falling into negative territory in late April.

Methanex should receive a boost in the quarters to come on the back of this jump. Unfortunately for income investors, Methanex announced that it would be forced to reduce its quarterly dividend by 90% in response to the uncertain business environment.

Shares of Methanex had a favourable price-to-earnings ratio of 16 and a price-to-book value of 0.9 as of close on May 27. Its balance sheet is a mixed bag, but there is solid growth potential here. The stock is still trading at the low end of its 52-week range. Methanex is worth a look in late May.