Methanex Corporation's MEOH shares have rallied 58.8% year to date. The company has also outperformed the Zacks Chemical - Diversified industry's 16.9% growth over the same time frame. Methanex shares are gaining momentum, supported by its expanded North American production capacity, OCI integration benefits and focused deleveraging.
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Let's take a look at the factors that are driving MEOH stock.
MEOH Gains on Production Growth and OCI Acquisition
Methanex shares are supported by its expanding North American production capacity, improving reliability and OCI integration benefits. The company's Geismar platform continues to demonstrate strong production performance, with output reaching a record 1.027 million tons in the second quarter of 2026, up from 934,000 tons in the preceding quarter. With all three plants operating at high rates, management is targeting approximately 4 million tons of annual production at the site, supported by a 97% reliability rate between turnaround cycles. The expanded production base is expected to improve supply reliability and support stronger cash generation.
The integration of OCI's assets is another key growth driver. The acquisition has strengthened Methanex's North American footprint through the Beaumont facility and its 50% interest in Natgasoline. Both assets are performing above the assumptions used in the acquisition valuation. The company is expected to realize synergies, while technical reviews and maintenance programs aim to reduce vulnerabilities during the next turnaround.
MEOH Benefits From Deleveraging
Methanex's improving financial position also boosts investor confidence. Robust cash generation enabled the company to fully repay the remaining $290 million of its Term Loan A during the second quarter of 2026. The company progressed towards its initial leverage target of approximately 3X adjusted debt to adjusted EBITDA. It is positioning itself for further balance-sheet improvement to reach its longer-term 2X to 2.5X target range. Management's focus on directing free cash flow toward debt reduction and cash accumulation should reduce risk and enhance flexibility.
MEOH's Zacks Rank & Other Key Picks
MEOH currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Basic Materials space are Reliance, Inc.RS, Avino Silver & Gold Mines Ltd.ASM and Avient CorporationAVNT.
RS currently sports a Zacks Rank #1 (Strong Buy), while ASM and AVNT carry a Zacks Rank #2 each. You can see the complete list of today's Zacks #1 Rank stocks here
The Zacks Consensus Estimate for RS' 2026 earnings is pegged at $23.70 per share, indicating a 66.2% year-over-year surge. RSshares have gained 49.1% over the past year.
The Zacks Consensus Estimate for ASM's current fiscal-year earnings is pinned at 28 cents per share. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 75%.
The Zacks Consensus Estimate for AVNT's 2026 earnings is pegged at $3.2 per share, indicating a year-over-year rise of 13.48%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%.
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This article originally published on Zacks Investment Research (zacks.com).
