For a while there, International Paper (NYSE:IP) investors must have felt they couldn't see the forest for the trees. But now, the forest products and paper giant has reversed the loss it reported in last year's fourth quarter. The company forecasts a weak upcoming first quarter, but sees a better year ahead, with demand strengthening in several product categories in the coming months.

It hasn't been easy for International Paper, as Jeff Hwang observed several months ago. Moves to cut costs and raise prices helped its fourth quarter, but 2003 proved a formidable year overall. Higher energy and raw materials costs, a weak pricing environment, and sluggish demand all played a role.

Indeed, judging by International Paper's lackluster outlook for the coming quarter, the entire industry seems lost on the trail of an improving economy. Others that faced the same tough environment in 2003 include Meadwestvaco (NYSE:MWV) and Weyerhaeuser (NYSE:WY).

At least International Paper fared better than rival Weyerhaeuser, which recently reported falling profits for the fourth quarter, tagging the paper and packaging segment as most challenging. Meadwestvaco, meanwhile, handed investors a 38% increase in profits, though that was driven mostly by one-time gains.

All three stocks were up modestly on Monday, boosted by International Paper's upbeat outlook for the latter part of the year. However, given recent gains in the paper stocks -- and with so much hinging on an improving economy -- investors might want to wait to take a chance on timber.

Alyce Lomax welcomes your feedback via e-mail .