After wild swings in prices throughout the pandemic, lumber prices have been stable through 2023 and 2024, hovering around $500 per thousand board feet. Lumber is a key input in homebuilding and home improvement. With the housing market sluggish, lumber prices are down significantly from their peak during the COVID-19 pandemic.
Top stocks
Top lumber stocks in 2025
Let's delve into a few of the best lumber stocks to buy this year.
| Company | Ticker | Description |
|---|---|---|
| International Paper | (NYSE:IP) | Maker of paper products under brands such as Hammermill, Springhill, and Williamsburg |
| Boise Cascade | (NYSE:BCC) | Manufacturer of wood products, primarily for home construction and home improvement |
| West Fraser Timber Company | (NYSE:WFG) | Lumber producer and maker of a variety of wood and paper products |
| UFP Industries | (NYSE:UFPI) | Global manufacturer of treated lumber products, like decking and fencing |
1. International Paper
1. International Paper
Demand for paper may have crumpled in the digital era, but that hasn't stopped International Paper from delivering solid returns for investors, especially with its dividend considered. International Paper is one of the world's biggest paper manufacturers, but it produces mostly industrial packaging, such as the cardboard that allows it to benefit from the boom in e-commerce.
Industrial packaging accounts for more than 80% of International Paper's revenue and is the company's largest business segment. After the 2021 spinoff of its printing paper business, Sylvamo (SLVM 1.16%), the company has moved toward a pure play in that category.
International Paper's only other business segment is global cellulose fibers, which includes supplying paper products such as fluff and pulp for a wide range of products.
The company's revenue has declined slightly through the first three quarters of 2024, and it announced job cuts as it reviewed its global cellulose fibers business. However, its acquisition of DS Smith, a British packaging business, is set to close in the first quarter of 2025.
International Paper expects the purchase to enhance its innovation and geographic reach and improve its scale. International Paper has long paid a dividend to investors (currently a 3.5% dividend yield) and trades at a reasonable forward price-to-earnings ratio, making this stock a solid choice for both value and income investors.
2. Boise Cascade
2. Boise Cascade
Boise Cascade has been one of the best-performing lumber stocks in recent years, as the stock more than tripled from the start of 2020 to the end of 2024. Profits soared as well as the company benefited from higher lumber prices, which are still well above pre-pandemic levels.
The manufacturer of wood products has struggled more recently with the soft housing market since the company says demand for its products is correlated with new residential construction. Through the first three quarters of 2024, revenue was down slightly, but recent interest rate cuts could help give the housing market a boost.
Like International Paper, Boise Cascade continues to grow through acquisitions, acquiring the Parksite door shop with 22 locations in Florida in December 2024. The company also pays a modest but consistent dividend currently yielding 0.7%. Since most of the company's business comes from building materials, its prospects are closely tied to the housing market, so it's a good choice if you're bullish on housing.
3. West Fraser
3. West Fraser Timber Company
The West Fraser Timber Company produces much of its wood from publicly owned forests in Canada, where it has licenses to harvest. Although more than 40% of the company's 2023 revenue came from lumber, West Fraser also makes pulp, paper, and engineered wood products, like plywood panels.
In February 2021, the lumber producer acquired Norbord, another Canadian timber company and the world's biggest producer of oriented strand board (similar to particleboard), for $3.1 billion. Like Boise Cascade, West Fraser's business is correlated with new construction, and its revenue has declined this year.
However, its North American engineered wood products, which benefited from the Norbord acquisition, have been strong and profitable. Long-term trends in the North American housing market should benefit West Fraser's lumber business as new constructions should eventually pick up.
Profits for West Fraser can be volatile, as is the case for many commodity producers. The company also currently offers a 1.5% dividend yield.
4. UFP Industries
4. UFP Industries
UFP Industries is a large, diversified lumber and wood-based materials company. It operates in three segments: construction, packaging, and retail solutions such as decking, siding, and fencing. Like its peers, UFP has struggled with a slow housing market as sales in all three of its segments fell in the third quarter.
The company expects those challenges to persist through at least the beginning of 2025, though it's focused on controlling costs and driving efficiencies. It's also on the lookout for acquisitions and just announced the acquisition of C&L Wood Products, an Alabama-based small manufacturer of pallets and mulch. C&L generated $24.8 million in sales during the 12 months ended in November 2024.
Lower commodity prices tend to lower valuations in the industry, creating opportunities for industry leaders like UFP Industries.
Careful with commodities
Investing in commodity stocks such as lumber can be difficult because prices move for unpredictable reasons, including natural disasters, geopolitical tensions, and market shocks, such as the COVID-19 pandemic. The good news for lumber investors is that lumber is an essential ingredient in homebuilding and home furnishings.
Related investing topics
Because of its omnipresence and durability, its status as a key input in those industries is unlikely to change. Structural tailwinds in the U.S. seem to be building for lumber since there's a significant lag in housing inventory. An increasing acceptance of remote work should also favor homebuilding and home improvement.
The best commodity stocks have competitive advantages, allowing the businesses to do well even in difficult economic conditions. The businesses above have all stood the test of time and have stakes in growing industries, such as e-commerce and homebuilding.
International Paper, Boise Cascade, West Fraser, and UFP Industries look well positioned for the long term for investors looking to gain exposure to lumber.
