10 Undervalued Chemical Stocks to Invest In

8. Methanex Corporation (NASDAQ:MEOH)

Forward P/E: 8.89

Earnings Growth: 20.90%

Number of Hedge Fund Holders: 19

Methanex Corporation (NASDAQ:MEOH) is a Canadian chemical company that specializes in the production and distribution of methanol worldwide. As the largest methanol producer globally, Methanex operates production facilities in Canada, Chile, Egypt, New Zealand, Trinidad and Tobago, and the United States. The company has a strong supply chain supported by terminals and the largest fleet of dedicated methanol ocean tankers.

On September 8, 2024, Methanex Corporation (NASDAQ:MEOH) reported that it has entered into a definitive agreement to acquire OCI Global’s international methanol business for $2.05 billion. This deal includes two major methanol facilities in Beaumont, Texas, one of which also produces ammonia. The acquisition aligns with Methanex’s strategy to enhance its production capabilities and access to North American natural gas feedstock, which is crucial for methanol production. The transaction is expected to close in the first half of 2025 and it also includes a low-carbon methanol production and marketing business and a currently inactive methanol facility in the Netherlands.

In the second quarter of 2024, the company reported a net income attributable to shareholders of $35 million and an adjusted EBITDA of $164 million. Although production was affected by gas constraints in Chile, Egypt, and New Zealand, the average realized price for methanol increased to $352 per tonne in Q2 2024 from $343 per tonne in Q1 2024. Methanex Corporation (NASDAQ:MEOH) returned $12.5 million to shareholders through dividends and ended the quarter with $426 million in cash.

The company successfully produced its first methanol at the Geismar 3 (G3) plant in Louisiana in late July 2024. With G3 expected to ramp up to full production, it will significantly enhance Methanex Corporation’s (NASDAQ:MEOH) cash flow generation capabilities while maintaining one of the lowest emission intensity profiles in the industry. This development positions the company for improved sales and earnings as G3 becomes fully integrated into its operations.

With its commitment to operational excellence and strategic growth initiatives, Methanex Corporation (NASDAQ:MEOH) is well-positioned for future success. The combination of strong performance, strategic acquisitions, and a focus on sustainability makes MEOH an attractive stock for investors looking for opportunities in the chemical sector.