ACT NOW: 1 Value Stock for TFSA Investors to Own

Methanex Corp. (TSX:MX)(NASDAQ:MEOH) has maintained healthy financial capacity and ensured flexibility to navigate the current environment and emerge stronger over the cycle as conditions improve.

| More on:
Value for money

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Methanol is a clear liquid commodity chemical that is predominantly produced from natural gas. Traditional chemical demand, which represents over 50% of global methanol demand, is used to produce traditional chemical derivatives that form the basis of a wide variety of industrial and consumer products.

Demand for energy-related applications, which represents just under 50% of global methanol demand, includes a number of applications such as fuel applications, which includes vehicle fuel, marine fuel, and biodiesel. Methanex (TSX:MX)(NASDAQ:MEOH) is the world’s largest producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe, and South America.

Diverse ownership interests

The company’s total annual operating capacity, including Methanex’s interests in jointly owned plants, is currently 9.2 million tonnes and is located in New Zealand, the United States, Trinidad, Chile, Egypt, and Canada. In addition to the methanol produced at the company’s sites, Methanex also purchases methanol produced by others under methanol offtake contracts and on the spot market.

This gives it flexibility in managing supply chain while continuing to meet customer needs and support marketing efforts. Methanex has marketing rights for 100% of the production from the jointly owned plants in Trinidad and Egypt, which provides it with an additional 1.3 million tonnes per year of methanol offtake supply when the plants are operating at full capacity.

Focused on growing shareholder value

Methanex’s primary objective is to create value through leadership in the global production, marketing, and delivery of methanol to customers. The company achieves this objective through global leadership, low-cost operations, and operational excellence. Methanex has consciously adopted a culture of flexibility, responsiveness, and creativity that allows it to capitalize on opportunities quickly as they arise and swiftly respond to customer need.

The company is focused on creating value through Methanex’s position as the major producer and supplier in the global methanol industry. Methanex’s 2020 sales volume of 10.7 million tonnes of methanol represented approximately 13% of global methanol demand. This scale allows it the flexibility to meet customer needs across international markets.

The company’s leadership position has also enabled it to play an important role in the methanol industry, which includes publishing Methanex reference prices that are used in each major market as the basis of pricing for customer contracts. The geographical diversity of Methanex’s production sites allow it to deliver methanol cost effectively to customers in all major global markets.

Significant capital-deployment opportunities

Methanex regularly invests in global distribution and supply infrastructure, which includes a fleet of oceangoing vessels and terminal capacity in all major international markets, enabling it to enhance value to customers by providing reliable and secure supply. A key component of the company’s global leadership strategy is the scale of Methanex’s asset position with 9.2 million tonnes of operating capacity.

Methanex’s expanding presence in Asia Pacific has also helped it identify several opportunities to support the development of applications for methanol in the energy-related sector and applications aimed to promote the use of clean-burning fuels.

In summary, Methanex has maintained healthy financial capacity and ensured flexibility to navigate the current environment and emerge stronger over the cycle as conditions improve.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned. The Motley Fool recommends METHANEX CORP.

More on Investing

protect, safe, trust
Stocks for Beginners

2 Safe Stocks Beginners Can Buy for Reliable Passive Income

If you are a beginner investor looking for safe, reliable passive income, I've got two TSX stocks you can rely…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 Oversold Great Canadian Dividend Stocks to Buy Now and Own for 20 Years

These top Canadian dividend stocks look oversold right now and continue to raise their payouts.

Read more »

Man holding magnifying glass over a document
Dividend Stocks

3 Value TSX Stocks to Eye in July 2022

Here are a few value TSX stocks to check out in July 2022. They also pay juicy, safe dividend income…

Read more »

sad concerned deep in thought

Elon Musk Buys Dogecoin: Should You?

Elon Musk is back to buying Dogecoin (CRYPTO:DOGE). Should you join him?

Read more »

analyze data
Dividend Stocks

2 Canadian Stocks at the Top of My Buy List

Here are two of the top Canadian stocks on my buy list, as the market uncertainty continues to plague Canadian…

Read more »

question marks written reminders tickets

Oil Stocks vs. Gold: Which Is Better for a Recession?

Gold is considered a good asset to hold in recessions, but oil stocks like Cenovus Energy (TSX:CVE)(NYSE:CVE) are doing better…

Read more »

gas station, convenience store, gas pumps

Is Alimentation Couche-Tard (TSX:ATD) Stock a Buy After Disappointing Earnings?

Alimentation Couche-Tard (TSX:ATD) had a challenging fourth quarter, but there are still plenty of reasons to like this stock long…

Read more »

Stocks for Beginners

Investing Strategies for Canadians in an Uncertain Economy

These are uncertain times, as the economy grapples with high inflation. Here are four investing strategies for the current market.

Read more »