In this article, we will look at the 10 best lumber stocks to buy right now.
The Global Lumber and Wood Market: An Overview
The global lumber and wood market plays a crucial role in various industries, including construction, furniture, and packaging. As one of the most versatile building materials, lumber is essential for residential and commercial construction, providing structural support and aesthetic appeal. It is also widely used in packaging solutions. The paper and pulp industry is another significant consumer of wood products. Lumber is processed into pulp to produce a wide range of paper products, including newspapers, packaging materials, and tissues. Companies involved in the lumber industry can range from sawmills that cut trees into lumber to manufacturers producing furniture and packaging materials, highlighting the diverse businesses that depend on this essential resource.
According to a report by The Business Research Company, the global wood products market was valued at $750.14 billion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 7% during 2024-2028 to reach a value of $1.054 trillion by the end of the forecast period. The Asia-Pacific region was the largest market for wood products globally in 2023.
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Recent trends indicate that the global lumber market is experiencing both challenges and growth opportunities. In the North American market, housing starts can have a direct impact on lumber demand, which is essential for the construction of homes. Factors such as population growth, urban development, and mortgage interest rates can all play a crucial role in determining the level of housing starts.
On December 18, Bloomberg reported a surprising decline in new home construction in the US for November. Housing starts fell by 1.8%, reaching an annualized rate of 1.29 million, marking the slowest pace since July. This decrease was largely attributed to a significant drop in multifamily projects, which fell by over 23%, overshadowing a 6.4% increase in single-family home starts. The rise in single-family construction was primarily driven by a rebound in the South, particularly as areas affected by hurricanes in previous months began to recover.
Despite the increase in single-family homes, the overall outlook for the housing industry has become less optimistic recently. While the South showed a notable improvement, all other regions experienced declines in housing starts.
However, the notable uptick in single-family home construction is a positive trend. As the housing market recovers, the demand for lumber is poised to rise. Another significant trend is the increasing demand for sustainable building materials. Wood is expected to become a preferred choice due to its renewable nature and lower carbon footprint compared to other materials like steel or concrete. Additionally, technological advancements in lumber production contribute to market growth. Innovations in processing and manufacturing techniques are improving efficiency and reducing waste, which helps meet the rising demand without compromising quality.
However, it is important to remember that the lumber and wood industry serves a wide range of sectors, including paper, packaging, pulp, furniture, construction, and even energy production. This diversity allows the lumber market to remain resilient and adaptable to changes in demand across different industries. The global lumber market is vital to several key industries and is poised for growth despite current challenges.
With this background in mind, let’s take a look at the 10 best lumber stocks to buy right now.
An aerial view of a forest, its vastness revealing the lumber industry of the company.
Methodology
To compile our list of the 10 best lumber stocks to buy right now, we used the Finviz and Yahoo stock screeners to find the largest lumber and wood companies. We also reviewed financial media reports and consulted various online resources including ETFs to compile a list of the best lumber stocks. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best lumber stocks to buy right now are ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Lumber Stocks To Buy Right Now
10. West Fraser Timber Co. Ltd. (NYSE:WFG)
Number of Hedge Fund Holders: 21
West Fraser Timber Co. Ltd. (NYSE:WFG) is a Canadian forestry company that produces a wide range of wood products, including lumber, laminated veneer lumber (LVL), medium-density fiberboard (MDF), oriented strand board (OSB), plywood, pulp, paper, and wood chips. The company has over 60 facilities across Canada, the US, the UK, and Europe, and its products are used in home construction, repair and remodeling, industrial applications, papers, tissue, and box materials.
In the third quarter of 2024, West Fraser Timber Co. Ltd. (NYSE:WFG) reported sales of $1.437 billion, a decrease from $1.705 billion in the second quarter of 2024. The company generated an adjusted EBITDA of $62 million, reflecting a 4% margin. This quarter’s results were impacted by a $32 million lumber export duty expense related to the 2022 calendar year. The company experienced mixed results across its segments. There was strong demand for Spruce-Pine-Fir (SPF) lumber and solid performance in the North American Engineered Wood Products segment. However, Southern Yellow Pine (SYP) lumber demand remained weak due to ongoing challenges in the repair and remodeling markets. Despite these pressures, West Fraser Timber Co. Ltd. (NYSE:WFG) reported a trailing four-quarter adjusted EBITDA of $630, which is an improvement from the $561 million reported at year-end 2023.
The company’s balance sheet remains strong, with over $2 billion in liquidity at the end of the third quarter. West Fraser Timber Co. Ltd. (NYSE:WFG) repurchased 446,460 shares for $35 million during the quarter, demonstrating its commitment to returning value to shareholders.
In September 2024, West Fraser Timber Co. Ltd. (NYSE:WFG) announced it would indefinitely curtail operations at its Lake Butler sawmill in Florida due to high fiber costs and soft lumber markets. This decision aligns their capacity with current demand levels. With its diversified product offerings, strong financial position, and proactive management strategies, West Fraser Timber Co. Ltd. (NYSE:WFG) is well-positioned for future growth, making it an attractive investment opportunity in the lumber sector.
9. UFP Industries Inc. (NASDAQ:UFPI)
Number of Hedge Fund Holders: 22
UFP Industries Inc. (NASDAQ:UFPI) is a holding company that manufactures and distributes products for construction, packaging, and industrial applications and operates over 200 facilities worldwide. The company is a key supplier of lumber to the manufactured housing industry. It operates through its subsidiaries: UFP Packaging, UFP Construction, and UFP Retail Solutions. UFP Industries Inc. (NASDAQ:UFPI) ranks among the best lumber stocks to buy.
In the third quarter of 2024, the company reported net sales of $1.65 billion, a 10% decrease compared to the previous year. This decline was attributed to a 3% drop in organic unit sales and a 7% reduction in selling prices, primarily due to a 21% decrease in the price of Southern Yellow Pine, which makes up about two-thirds of the company’s lumber purchases. UFP Industries Inc. (NASDAQ:UFPI) faced a challenging market due to softer demand and pricing pressure that affected both revenue and profit margins.
To address these difficulties, UFP Industries Inc. (NASDAQ:UFPI) is implementing several strategic initiatives. The company is looking to consolidate facilities to enhance capacity utilization and cut operating costs. UFP Industries Inc. (NASDAQ:UFPI) is also exploring strategic alternatives for certain business units that do not align with long-term goals. By fully implementing these initiatives, the company expects to achieve over $70 million in annual cost reductions.
UFP Industries Inc. (NASDAQ:UFPI) is focused on future growth. The company plans to invest approximately $1 billion over the next five years to pursue strategic acquisitions and invest in organic growth opportunities. This includes capital investments of $300 million in 2024 for automation, technology upgrades, and capacity expansion. This commitment to capital investment will help drive organic growth and improve operational efficiency. With a strong focus on proactive management, UFP Industries Inc. (NASDAQ:UFPI) presents an attractive investment opportunity in the lumber sector.
8. Simpson Manufacturing Co. Inc. (NYSE:SSD)
Number of Hedge Fund Holders: 22
Simpson Manufacturing Co. Inc. (NYSE:SSD) is a leading engineering and building materials company. It specializes in designing, engineering, and manufacturing wood construction products. Their product range includes connectors, truss plates, fastening systems, fasteners, and shear walls. Simpson Manufacturing Co. Inc. (NYSE:SSD) also manufactures concrete construction products.
In the third quarter of 2024, the company reported net sales of $587.2 million, showing a modest increase year-over-year despite ongoing pressure in the housing markets in both the US and Europe. Simpson Manufacturing Co. Inc. (NYSE:SSD) experienced a 500 basis point volume growth in North America, outpacing US housing starts over the past year. In light of market challenges, the company is shifting its focus to align costs with market conditions and improve overall profitability.
Additionally, Simpson Manufacturing Co. Inc. (NYSE:SSD) is actively investing in its facilities to enhance production capabilities. The expansion of their Columbus, Ohio facility is on track to be fully operational by early 2025, while a new fastener facility in Gallatin, Tennessee is expected to be completed by late 2025.
During the third quarter of 2024, Simpson Manufacturing Co. Inc. (NYSE:SSD) also acquired QuickFrames USA, a leader in engineered structural roof frames across the US, Canada, and Mexico. This acquisition will strengthen the company’s position in the market and expand its product offerings. With ongoing investments and strategic acquisitions, Simpson Manufacturing Co. Inc. (NYSE:SSD) is well-positioned for future growth. The company’s ability to adapt to market challenges while expanding its operational capacity makes it an attractive stock for investors looking at the lumber sector.
7. Mercer International Inc. (NASDAQ:MERC)
Number of Hedge Fund Holders: 23
Mercer International Inc. (NASDAQ:MERC) is an American multinational company that specializes in manufacturing and selling pulp, solid wood, and various other products. The company focuses on pulp, biomaterials, biochemicals, and innovative lumber products like cross-laminated timber. Mercer International Inc. (NASDAQ:MERC) is one of the best lumber stocks to buy.
In the third quarter of 2024, the company reported an operating EBITDA of $50.5 million, a notable increase from $37.5 million in the same quarter of 2023. This growth reflects Mercer International Inc.’s (NASDAQ:MERC) strong performance in softwood pulp markets and stable fiber costs. However, production was impacted by unplanned downtime at the Peace River mill, which limited pulp sales volumes. Fortunately, Mercer International Inc. (NASDAQ:MERC) was able to restart the Peace River mill earlier than expected, reducing downtime in the fourth quarter to just 12 additional days. The company has no further downtime planned for its pulp mills for the remainder of 2024, which should support improved operational efficiency moving forward.
In 2022, Mercer International Inc. (NASDAQ:MERC) acquired Holzindustrie Torgau for EUR 270 million, including net working capital. This transaction includes a value-add pallet production facility in Torgau, Germany and a wood processing facility in Dahlen, Germany. This acquisition has begun to pay off, with nearly $5 million in synergies realized by the end of Q3 2024. The company anticipates achieving about $8 million in total synergies by year-end and believes that once Torgau’s lumber capacity is fully operational, it can achieve annual synergies of $16 million. With a strong focus on expanding its business and operational efficiencies, Mercer International Inc. (NASDAQ:MERC) is well-positioned for future growth.
6. PotlatchDeltic Corporation (NASDAQ:PCH)
Number of Hedge Fund Holders: 28
PotlatchDeltic Corporation (NASDAQ:PCH) is a prominent timberland owner and one of the top lumber manufacturers in the United States. The company manages nearly 2.2 million acres of timberland across nine states and operates seven manufacturing facilities that produce lumber and plywood. PotlatchDeltic Corporation (NASDAQ:PCH) ranks among the best lumber stocks to buy.
In the third quarter of 2024, the corporation reported a net income of $3.3 million and revenues of $255.1 million. This is a decrease from the same quarter in the previous year, when the company reported a net income of $23.7 million and revenues of $265.5 million. Despite this decline, PotlatchDeltic Corporation (NASDAQ:PCH) generated a total adjusted EBITDA of $45.9 million, reflecting an 18% margin, which indicates solid operational performance amid a challenging lumber market.
A significant development in Q3 2024 for PotlatchDeltic Corporation (NASDAQ:PCH) is the completion of its sawmill expansion and modernization project in Waldo, Arkansas. This strategic investment is expected to enhance the mill’s capacity by 85 million board feet annually and improve recovery rates while reducing processing costs by about 30%. Once fully operational, this facility is expected to generate an additional $25 million in adjusted EBITDA under mid-cycle sales conditions. Ongoing improvements in production capacity combined with a focus on operational efficiency and strategic investments position PotlatchDeltic Corporation (NASDAQ:PCH) well for future growth.
5. Weyerhaeuser Company (NYSE:WY)
Number of Hedge Fund Holders: 29
Weyerhaeuser Company (NYSE:WY) is a leading American timberland and lumber company, owning or managing around 10.5 million acres of timberlands in the US and 14 million acres in Canada. The company is one of the largest wood products manufacturers in North America, producing engineered lumber, oriented strand board (OSB), plywood, and medium-density fiberboard panels.
In the third quarter of 2024, Weyerhaeuser Company (NYSE:WY) reported net sales of $1.7 billion, down from $2.0 billion in the same quarter last year. This decline reflects a challenging market environment. The company posted a net income of $28 million compared to $239 million in net income for Q3 2023. Despite the decrease, Weyerhaeuser Company (NYSE:WY) achieved an adjusted EBITDA of $236 million, indicating solid operational performance despite a challenging market backdrop.
In November 2024, Weyerhaeuser Company (NYSE:WY) announced plans to invest about $500 million in a new TimberStrand facility in Arkansas, which will significantly boost its capacity for engineered wood products. This facility is expected to produce around 10 million cubic feet annually and generate over $100 million in annual adjusted EBITDA once fully operational. Construction is expected to start in 2024 and operations are projected to begin in 2027.
Previously, in July, the company had announced strategic timberland acquisitions in Alabama, totaling 84,300 acres for $244 million. With its focus on expanding production capacity and strategic land acquisitions, Weyerhaeuser Company (NYSE:WY) is well-positioned for future growth.
4. Smurfit Westrock Plc (NYSE:SW)
Number of Hedge Fund Holders: 29
Smurfit Westrock Plc (NYSE:SW) is an Irish-American company specializing in corrugated and paper-based packaging. It operates in 40 countries with over 500 converting operations and 62 paper mills, providing a wide range of innovative packaging solutions ranging from corrugated and consumer packaging to Bag-in-Box packaging and point-of-sale displays. Smurfit Westrock Plc (NYSE:SW) is one of the best lumber stocks to invest in.
WestRock and Smurfit Kappa merged to become Smurfit Westrock Plc (NYSE:SW). In its first financial report as Smurfit Westrock Plc (NYSE:SW), the company announced results for the third quarter ended September 30, 2024. Net sales surged to approximately $7.67 billion, a significant increase from $2.91 billion in the same quarter of 2023. This growth was largely driven by the acquisition of WestRock, which contributed nearly $4.69 billion to sales. Additionally, there was a positive volume impact from increased corrugated product demand.
Despite this revenue growth, Smurfit Westrock Plc (NYSE:SW) reported a net loss of $150 million for the quarter, primarily due to transaction-related expenses and purchase accounting adjustments totaling around $500 million. The company’s Adjusted EBITDA stood at $1.26 billion, with an Adjusted EBITDA margin of 16.5%, indicating strong operational performance.
The integration of Smurfit Kappa and WestRock is progressing well, creating a solid foundation for future growth. The company aims to achieve synergies of at least $400 million through improved operational efficiency and plant-level autonomy. With a robust portfolio and strategic growth initiatives underway, Smurfit Westrock Plc (NYSE:SW) presents a compelling investment opportunity.
3. Boise Cascade Company (NYSE:BCC)
Number of Hedge Fund Holders: 29
Boise Cascade Company (NYSE:BCC) is a major producer of engineered wood products and plywood in North America. The company also serves as a leading wholesale distributor of building materials in the US, supplying both residential and commercial construction sectors. Boise Cascade Company (NYSE:BCC) ranks among the top lumber stocks to invest in.
In the third quarter of 2024, the company reported sales of $1.7 billion and a net income of $91 million. This marks a decline from the previous year, where sales were $1.8 billion and net income was $143.1 million. The decrease in income reflects a challenging market, with total US housing starts down by 3% and single-family starts down by 1% compared to the same quarter in 2023.
Despite these challenges, Boise Cascade Company (NYSE:BCC) demonstrated resilience by adapting to a moderate demand environment. Through the first three quarters of 2024, the company paid $220.5 million in common stock dividends and paid $158.5 million for the repurchase of over 1.2 million shares of its common stock.
Additionally, on December 10, 2024, Boise Cascade Company (NYSE:BCC) announced the acquisition of the Parksite door shop in Lakeland, Florida. This addition will expand its millwork operations to 15 locations and enhance its product offerings in the Florida market. Boise Cascade Company’s (NYSE:BCC) commitment to returning capital to shareholders while investing in strategic initiatives makes it an attractive stock for investors looking at the lumber sector.
2. Louisiana-Pacific Corporation (NYSE:LPX)
Number of Hedge Fund Holders: 39
Louisiana-Pacific Corporation (NYSE:LPX) is a leading manufacturer of engineered wood products, catering to builders, remodelers, and homeowners around the globe. The company operates 22 plants in the US, Canada, Chile, and Brazil, offering a wide range of products including siding solutions, structural solutions, and oriented strand board (OSB). Louisiana-Pacific Corporation (NYSE:LPX) ranks among the best lumber stocks to invest in.
In the third quarter of 2024, the corporation reported a slight decline in net sales, down by $6 million or 1% compared to the previous year. However, siding revenue saw a significant increase of $76 million, or 22%, driven by a 15% rise in volume and a 6% increase in prices. This growth in siding sales highlights Louisiana-Pacific Corporation’s (NYSE:LPX) ability to adapt and thrive in changing market conditions.
The company generated $153 million in EBITDA, which translated into $184 million in operating cash flow. Louisiana-Pacific Corporation (NYSE:LPX) strategically invested $44 million in capital expenditures during the third quarter while also returning $91 million to shareholders through dividends and share repurchases in the same quarter. As of September 30, 2024, the company maintained nearly $900 million in liquidity and a robust balance sheet.
The commitment to returning value to shareholders while investing in growth initiatives positions Louisiana-Pacific Corporation (NYSE:LPX) as a strong player in the lumber market. As of the third quarter of 2024, LPX was held by 39 hedge funds, according to Insider Monkey’s database. SouthernSun Asset Management, LLC stated the following regarding Louisiana-Pacific Corporation (NYSE:LPX) in its “SouthernSun Small Cap Strategy” third quarter 2024 investor letter:
“Louisiana-Pacific Corporation (NYSE:LPX) was the top contributor in the Small Cap strategy in the third quarter. LPX is a market leader in the manufacturing of engineered wood siding and oriented strand board (OSB). The company’s siding products have been on a secular growth trend, taking share from other forms of siding in recent years due to a superior value proposition tied to factors such as aesthetics, ease of use, and quality. During the second quarter, LPX siding sales performed strongly and management increased 2024 segment guidance. Market data suggests the company is gaining share from vinyl and other siding products in the new builder, repair and remodel, and retail channels, and has a long-term opportunity to continue this trend. The company’s OSB assets and leading market position remain an important component of the company’s long-term value. The largest use for OSB is sheathing for residential new construction, and thus demand for OSB is correlated with housing starts. OSB prices are largely dependent on supply and demand dynamics within the industry. During the second quarter, prices were relatively strong, which combined with strong operating performance by the company, led to strong profits. Management expects lower prices and thus lower OSB profits in the third quarter. Overall, we believe recent performance underscores the quality of the company’s assets and management’s skill, and we continue to expect satisfactory long-term results as shareholders.”
1. International Paper Company (NYSE:IP)
Number of Hedge Fund Holders: 44
International Paper Company (NYSE:IP) is a global pulp, paper, and packaging company. The company’s products and services include wood pulp fiber, pulp and paper products, packaging products and services, and recycling services. Serving various industries and customers worldwide, the company has operations across North America, Europe, Latin America, and North Africa. International Paper Company (NYSE:IP) is one of the best lumber stocks to buy.
In April 2024, the company announced a strategic move to acquire DS Smith, a leading provider of sustainable packaging in Europe. This all-share combination is expected to close in early 2025 and aims to create a major force in the sustainable packaging market. The merger will enhance International Paper Company’s (NYSE:IP) capabilities and expand its presence in Europe, where DS Smith has a strong foothold. The integration of DS Smith’s containerboard production into International Paper Company’s (NYSE:IP) operations will also significantly increase their efficiency, with an anticipated integration rate of around 90% for containerboard products.
The company is committed to driving profitable growth through innovation and sustainability. It deployed an 80/20 approach to streamline operations and reduce costs while focusing on customer satisfaction. Recent organizational restructuring and facility closures are part of this strategy to enhance competitiveness. International Paper Company (NYSE:IP) has announced the permanent closure of its Georgetown, South Carolina mill by the end of 2024.
Such strategic moves position IP well for future growth. The acquisition of DS Smith not only strengthens its market position but also demonstrates a commitment to sustainable practices that resonate with today’s consumers. These factors make International Paper Company (NYSE:IP) a compelling investment opportunity for those looking at lumber stocks.
Overall, IP ranks first among the 10 best lumber stocks to buy right now. While we acknowledge the potential of lumber companies, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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