The paper and forestry products industry mixes varied industries with specific end markets rather than one single market. As such, investors can gain exposure to a wide range of investment themes.
For example, there's a growth opportunity in transport packaging driven by surging e-commerce demand. Meanwhile, demand for consumer packaging and tissue offers investors a solid and stable way to get exposure to global economic growth. Despite the decline in graphic paper (newsprint and writing paper) and other areas, the overall industry is still growing. So, let's look at the top paper stocks and what makes them attractive for investors.
Leading paper companies
The leading paper companies to invest in
The following table outlines a few of the leading paper and lumber stocks you can buy stock in.
| Company name | Company ticker | Market cap | Industry |
|---|---|---|---|
| International Paper | NYSE:IP | $27 billion | Containers and Packaging |
| Suzano | NYSE:SUZ | $12 billion | Paper and Forest Products |
| Clearwater Paper | NYSE:CLW | $484 million | Paper and Forest Products |
| Mercer International | NASDAQ:MERC | $275 million | Paper and Forest Products |
International Paper
International Paper
Following the spinoff of its printing papers segment (uncoated papers used in copiers, desktop printers, and digital imaging) into a new company, Sylvamo (SLVM 0.82%), International Paper is now focused on two core businesses.
The industrial packaging segment (around 83% of 2024 revenue) manufactures linerboard, with the majority of sales volumes going toward corrugated boxes and the rest toward containerboard.
The global cellulose fibers segment (around 17% of revenue) produces fluff, market, and specialty pulp. As the name suggests, fluff pulp is used to make baby diapers, feminine care products, and other personal care products. Market pulp is used in paper and tissue products, and specialty pulp is used in a range of end markets, such as textiles, construction, and paints.
International Paper recently acquired British packaging company DS Smith to create a global sustainable packaging company, and management believes it can generate $514 million in synergies from the acquisition. The deal marks an ongoing trend in paper industry consolidation.
Suzano
This Brazilian pulp and paper company produces eucalyptus hardwood pulp for its paper products and sells pulp to other paper manufacturers. Hardwood pulp tends to have shorter fibers, making it suitable for printing and writing paper, tissue paper, and specialty paper.
Suzano's end markets, notably printing and writing paper, may not be the most attractive in the industry, but they are still growing.
The company's management believes that eucalyptus pulp is growing as a share of hardwood pulp worldwide, so the long-term case for the stock rests on the cost-effectiveness of producing eucalyptus pulp in Brazil, which has a shorter growth cycle and a higher yield than other hardwood trees. According to Suzano's filings with the U.S. Securities and Exchange Commission (SEC), "Brazil has the fastest tree growth rates in the world and the highest productivity rate. Thus, we believe that we are among Brazilian pulp producers that have the lowest production cost in the global market."
Clearwater Paper Corporation
Clearwater Paper Corporation
The company focuses on the paperboard packaging industry. Its pulp and paperboard business produces bleached paperboard used in the high-end packaging industry. Clearwater has restructured in recent years, having sold its consumer products (tissues) in 2024 and acquired a paperboard manufacturing facility and associated business for $710 million.
Clearwater's Solid Bleached Sulfate (SBS) premium paperboard is sold into the folding carton market.
Mercer International
Mercer International
Mercer International also operates two segments: pulp and solid wood. Starting with pulp, Mercer is the second-largest producer of northern bleached softwood kraft (NBSK, the industry's pulp benchmark) in the world and the only significant pulp producer in Germany. It has two pulp mills in Germany and two in Canada.
In contrast with Suzano's hardwood, softwood pulp tends to have long fibers and is used in products that need greater strength, such as newsprint, paperboard, catalogs, and lightweight coated paper.
With pulp mills in Canada and Germany, and with 88% of its pulp sales made globally, Mercer truly is international.
The solid wood products segment manufactures and sells lumber and manufactured products, with its primary end markets in the U.S. and Germany.
The company offers investors a relatively safe way to play the cyclicality of the pulp market. As with all commodities and material stocks, pricing depends on the intersection of supply and demand.
Related investing topics
Investing in paper stocks
Investing in paper stocks
As this short introduction has outlined, the industry is a mix of various end markets. Some products, such as cigarette paper, newsprint, and writing paper, are in decline. Others, like corrugated boxes for e-commerce packaging, are in growth mode. Still others, such as tissue and packaging in general, are markets growing in line with the economy.
Many of the stocks in the industry trade on very low valuations that reflect the mature and low-growth nature of the industry. The sector should attract value investors looking for hidden gems in the bargain basement of the investment world.
FAQ
Investing in paper stocks: FAQ
What are paper stocks?
Paper companies produce fiber-based packaging, pulp, and paper-based products.
Are paper stocks worth investing in?
It's a relatively mature industry and tends to be cyclical, with significant sensitivity to demand and supply changes playing out in pricing.
Which paper stock is best to buy?
International Paper's acquisition of DS Smith makes it an attractive stock, not least because consolidation is often the best way to generate growth in mature industries.
Should I invest in paper stocks?
Paper stocks will suit investors looking to invest in relatively safe stocks that pay good dividends but offer little in the way of long-term top-line growth.
