Methanex Corp (MX.TO)

An excellent company, but unfortunately like any commodity company, it is going to move around a lot with the commodity. Doesn’t see much upside, so wouldn’t add any money to this, and perhaps even take some off.

(Market Call Minute) A one commodity company and they are a price taker, not a price maker.

In his ranking system, this ranks fairly well, both from a fundamental and technical aspect. If the economy is starting to pick up and expand, chemical production and chemical usage is going to increase, and that is where this company is. The cost of their input is still fairly reasonably priced. Over the next 12 to 24 months, with what is happening in the US, we could see chemical consumption go up and this company will take advantage of that.

This has always kind of traded in sympathy with oil, but the supply and demand dynamics of methane are quite separate from oil. The stock got killed because there is too much capacity. No new capacity has come online, and prices have been very strong in the last little while. He got out of this because he felt he couldn’t predict methanol prices. However, methanol is the base chemical for a lot of industrial chemicals and is needed for those processes. If he owned it, he would be taking some profits on it.

This follows crude prices to a large extent. Shares are still trading at only 65% of replacement value. For his model to work, methane prices only have to go up marginally this year and next. Their dividend is very well covered by cash flow. As long as you don’t mind the volatility, this is a good long term name.

Methanol is highly correlated to the price of oil. There are always concerns about Chinese producers producing more from coal. If you are an owner then just enjoy the ride while it is going up.

Thinks that this and methanol prices have bottomed out. The largest methanol producer globally. Good volume growth. Methanol prices have just increased a bit in North America. He is expecting good dividend growth and continued buybacks. The upside is decently significant.

Feels the methanol market has been in a bit of a disarray over the last year or 2, and that has been reflected in the stock’s price. A very, very cyclical business. If you feel the world is going into a slower growth, slower economy stage, he would hold off buying this.

The stock price doesn’t look much different than that of most oil companies. This is the leader in methanol. It needs a better sense of clarity with respect to global growth, as well as continued firmness in energy prices.

Technically this has been in a trading range, and you want the stock to move above the trading range from here. Right now it is not performing very well as it is still in a downward trend, and underperforming both the Canadian and US markets. Momentum indicators are still moving to the downside.

Single commodity producer. It had a great run for a couple of years. They missed in the last two quarters. It will be volatile for the next couple of quarters. It is the best way to play methanol.

(Market Call Minute.) Tremendously correlated to the price of natural gas. A good company and it will do better if we see any increase in price in North America.

It is an indirect oil play. They extract methanol. Their biggest input is natural gas. It is a well run company with a logistics chain second to none. This is one to keep an eye on.

The only commodity play he owns. They sell methanol which is used for a lot of industrial uses, as well as a fuel alternative in a lot of emerging markets. The problem is oil. Methanol is 100% tied to the price of oil. The demand is still strong, but the price has been cut. Has a perfect balance sheet, and he thinks the dividend is mostly safe.

Has been an interesting story for a long while. Sold off along with energy stocks. Given its substitutable product, longer-term it has had a pretty decent return. They have been expanding production and adding value. Wait until there is a little more comfort in the oil price situation.