In this article, we will take a detailed look at the best paper stocks to buy according to hedge funds.
Paper stocks encompass producers of paper, pulp, packaging products, toilet paper, and forestry operators. This sector typically thrives during periods of economic expansion when consumer spending, ecommerce activity, and industrial production are accelerating, driving higher demand for commercial packaging and consumer paper products. The performance of paper stocks strongly correlates with commodity prices of pulp and timber, as well as with the price of energy and freight, which are large cost inputs in the production chain. Consequently, paper-related stocks generally thrive in inflationary environments due to their pricing power, as producers can easily pass any inflation onto consumers and capture a margin of the price increase. Conversely, these stocks underperform during economic slowdowns as consumer demand and industrial activity fall, and lower commodity prices pressure profitability.
Some investors avoid this sector as they mistakenly consider it low growth and disrupted. Their perception is based on a tough 2010s decade marked by several challenges that pressured growth. Here is how AFRY Advisory commented on the paper market:
“With the universal move to digital communication, the demand for print has been on a steep decline, triggering massive shutdowns in the graphic paper sector and sizeable entries in the packaging board market through conversions and grade changes from graphics to packaging grades. The worldwide COVID-19 pandemic deepened the paper markets’ decline as decreasing economic activity and lockdowns further contracted the demand for graphics and office papers, while hygiene and corrugated packaging businesses recovered more effectively.”
READ ALSO: 10 Best Lumber Stocks To Buy Right Now
The struggles of the paper & paper products sector, as proxied by a timber ETF that includes many paper companies as well, extended into the 2020s. In early 2025, just before the US stock market entered correction mode, the sector reached a new all-time low relative to the broad market. Another global timber and wood ETF shows a similar picture – years of underperformance relative to the broad market, which killed most of the investor interest in this sector. Despite sluggish performance in the last years, we believe that the underfollowed paper sector may become favored in the following years due to a plethora of factors triggered by the new Trump 2.0 administration in the US.
First, we already know that paper stocks thrive during inflationary periods, and the US appears to have entered a multi-year period of above-average inflation due to the trade wars initiated by President Trump. Many of the paper companies have operations spanning several continents, with cultivation, processing, and selling often happening in two or three different countries, which means that the production chain may become subject to tariffs. Under such circumstances, paper companies will fully pass any inflationary pressures onto the end customer, meaning that they would capture a higher margin in absolute dollar value. The hypothesis of higher inflation in the US is fully supported by the 10-year US treasury yield climbing to 4.58% on April 11, significantly above the second half of 2024.
Second, the current US administration is a notorious proponent of onshoring, which means a partial or full return of manufacturing activity into the US. Paper stocks are positively correlated to the level of industrial and commerce activity in the US and could benefit from the accelerating demand for paper used in industrial and commercial packaging. In fact, the onshoring trend is already happening as several corporations, from semiconductors to automobile manufacturers and other consumer discretionary businesses, announced plans to boost their manufacturing presence in the US.
With that being said, we may currently be at an opportune moment to acquire the best paper stocks at bargain valuations and all-time lows relative to the broad market, just before they enter a new era favored by inflation and onshoring trends.
An aerial view of a paper mill filled with massive rolls of papers.
Our Methodology
We used a stock screener and thematic ETFs to identify companies engaged in the production of pulp, toilet paper, newspapers, cardboard, forest, and other paper-related products. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership and included in the article the top 10 stocks with the largest number of hedge funds that own the stock as of Q4 2024. The stocks are ranked in ascending order of the hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. IT Tech Packaging, Inc. (NYSEAMERICAN:ITP)
Number of Hedge Fund Holders: 1
IT Tech Packaging, Inc. (NYSEAMERICAN:ITP) is a China-based company engaged in the production and distribution of paper products. The company manufactures corrugating medium paper, offset printing paper, tissue paper, digital photo paper, and non-medical single-use face masks. Its competitive advantage is based on strategic positioning in Northern China, near major industrial hubs, facilitating low-cost production and efficient distribution. With its large scale, ITP can cover most of China’s internal paper consumption needs while having additional capacity for export, which makes it one of the best paper stocks to consider.
IT Tech Packaging, Inc. (NYSEAMERICAN:ITP) reported a significant revenue increase of 59% YoY in the most recently reported Q3 2024, primarily driven by increased sales volume of corrugating medium paper (CMP), though partially offset by decreased average selling prices. The company achieved a notable turnaround in gross profit, reaching $1.92 million compared to a loss of $0.15 million in the same period last year, with the gross profit margin improving to 7.64%.
Despite the revenue growth, IT Tech Packaging, Inc. (NYSEAMERICAN:ITP) continued to face operational challenges, recording an operating loss of $1.46 million, though this represented an improvement from the $2.48 million loss in the same period last year. The company’s financial position showed some stability, with cash and bank balances of $4.41 million as of September 30, 2024, and a working capital of approximately $12.22 million. The company’s focus on CMP products has become more pronounced, with CMP sales accounting for 99.85% of total revenue during the quarter.
9. Suzano S.A. (NYSE:SUZ)
Number of Hedge Fund Holders: 13
Suzano S.A. (NYSE:SUZ) is a forestry-based company and one of the world’s largest producers of eucalyptus pulp. Its portfolio of product includes coated and uncoated printing and writing papers, paperboard, tissue papers, market and fluff pulps, and lignin. The company’s advantage stems from its large scale across Brazil, the US, the UK, and China, as well as it being a vertically integrated player, with operations including both cultivation and processing/manufacturing.
Suzano S.A. (NYSE:SUZ) delivered a strong operational performance in the recent Q4 2024, achieving record sales volumes and setting a new baseline for cash cost operations. The company generated a robust EBITDA of BRL 23.8 billion for the year, bringing leverage in dollar terms to 2.9x. The company’s Ribas mill demonstrated impressive performance, reaching 900,000 tons of production and 700,000 tons of sales in 2024, fully aligned with guidance provided after its mid-2024 start-up.
Looking forward, Suzano S.A. (NYSE:SUZ) faces a tight supply scenario in Q1 2025 due to low inventories and scheduled maintenance downtimes while simultaneously benefiting from positive market dynamics in China. The company successfully renegotiated all commercial contracts for the US, securing better terms for 2025 and onwards, along with synergies in raw materials and logistics. Management remains focused on deleveraging while maintaining a strong hedging strategy, with the company currently having around $7.5 billion in the hedging portfolio. With 13 hedge funds owning the stock at the end of Q4 2024, SUZ is one of the best paper stocks to buy.
8. Sylvamo Corporation (NYSE:SLVM)
Number of Hedge Fund Holders: 16
Sylvamo Corporation (NYSE:SLVM) is a global producer of uncoated freesheet paper, operating several integrated and non-integrated mills across the US, Brazil, France, and Sweden. The company’s product portfolio encompasses copy and printer papers, commercial printing papers, converting papers, and specialty papers, marketed under well-known brands. SLVM ranked eighth on our recent list of 12 Best Land and Timber Stocks to Buy According to Analysts.
Sylvamo Corporation (NYSE:SLVM) delivered strong financial results in 2024, generating a 23% return on invested capital while strengthening its competitive position in core uncoated freesheet markets. The company achieved significant financial milestones, including $632 million in adjusted EBITDA with a 17% margin, $248 million in free cash flow, and adjusted operating earnings of $7.42 per share, which was 14% higher than 2023. The company maintained strong financial discipline by repaying $154 million in debt, achieving a net debt-to-adjusted EBITDA ratio of 0.9x, and returning $130 million in cash to shareholders.
Looking ahead, Sylvamo Corporation (NYSE:SLVM) is making strategic investments to strengthen its competitive position, particularly at its flagship Eastover mill in South Carolina, where three high-return projects are being implemented. These projects, requiring approximately $145 million in investments over three years, are expected to generate an internal rate of return greater than 30% and create incremental adjusted EBITDA of more than $50 million per year. The company exceeded its Project Horizon cost reduction program goals by $34 million, achieving savings through manufacturing efficiencies, supply chain optimization, and overhead cost reductions. With strong guidance ahead and profitable rates of returns on its key projects, SLVM is one of the best paper stocks to consider in 2025.
7. Mercer International Inc. (NASDAQ:MERC)
Number of Hedge Fund Holders: 22
Mercer International Inc. (NASDAQ:MERC) is a global forest products company that produces market pulp and solid wood products in Germany, Canada, and the US. MERC manages large-scale pulp mills that produce northern bleached softwood and hardwood kraft pulps, as well as biomass-based green energy. The company’s key solid wood segment includes the manufacture of lumber, timber, and wood pallets, with its key facilities being located in Germany. The company’s leadership is ensured through diversification across products, a focus on innovative green energy as well as a large annual production that exceeds 2 million tons per year.
Mercer International Inc. (NASDAQ:MERC) reported a significant improvement in Q4 2024, with an operating EBITDA of $99 million, almost doubling if compared to Q3, driven by no planned maintenance downtime, a strong dollar, and higher sales volumes. For the full 2024 fiscal year, EBITDA increased substantially to $244 million from $17 million in 2023, attributed to stronger pulp markets, lower production costs from easing inflation pressures, and cost-reduction initiatives. The company successfully redeemed its $300 million 2026 senior notes using $200 million of additional 2028 senior notes and $100 million of cash on hand, representing a first step in its leverage reduction initiative.
Looking ahead, Mercer International Inc. (NASDAQ:MERC) faces both opportunities and challenges, with softwood pulp pricing expected to remain strong due to reduced supply and steady demand. The significant contrast between softwood and hardwood pulp supply-demand fundamentals is expected to drive price differences beyond historical norms, with the current net price gap in China at about $220 per tonne compared to the historical norm of $100. The company’s absolute priority for 2025 will be reducing leverage through strategic projects, including aggressive cost reduction programs, reliability improvements, operational rationalization, and prudent capital management. These initiatives are set to position the company well to withstand any potential market turmoil, which makes it one of the best paper stocks to buy now.
6. Clearwater Paper Corporation (NYSE:CLW)
Number of Hedge Fund Holders: 30
Clearwater Paper Corporation (NYSE:CLW) is a manufacturer specializing in bleached paperboard products used in folding cartons, liquid packaging, and food service applications, primarily serving North American packaging converters. The company operates three mills located in the US, along with several converting facilities. The US-based company ranked seventh on our 2024 list of 7 Best Paper Stocks To Buy Right Now.
Clearwater Paper Corporation (NYSE:CLW) completed two transformative transactions in 2024 – acquiring the Augusta paperboard facility, which increased paperboard capacity by 70%, and selling its tissue business for $1.06 billion. The Augusta acquisition positions CLW as a premier independent paperboard packaging supplier in North America, with the potential to contribute $140 million to $150 million in annual adjusted EBITDA once volume synergies are captured and industry utilization normalizes. The tissue business sale proceeds were used to significantly delever the balance sheet, resulting in a net leverage ratio of 1.1x by year-end.
While industry demand showed improvement, with shipments increasing 4% in 2024, utilization rates remained below historical averages at 85%, creating pricing and margin pressure. In response, Clearwater Paper Corporation (NYSE:CLW) is implementing $30 million to $40 million in cost savings for 2025, including a 10% reduction in workforce, and has secured a major long-term supply agreement to help fill open capacity. Management remains optimistic about medium-to-long-term prospects, expecting strong margins and cash flows through the cycle with mid-cycle margins of 13% to 14% and free cash flow conversion of 40% to 50%. We include CLW on our list of best paper stocks to buy as we believe management has taken the right steps to improve the company’s resilience and long-term free cash flow growth.
5. Smurfit Westrock Plc (NYSE:SW)
Number of Hedge Fund Holders: 35
Smurfit Westrock plc (NYSE:SW) is a global leader in sustainable paper-based packaging solutions, formed in mid-2024 through the merger of Ireland’s Smurfit Kappa and US-based WestRock. The transaction boosted the company’s scale as it now operates in 40 countries, managing over 500 packaging converting operations and a large network of 62 paper mills. Its product portfolio includes corrugated packaging, consumer packaging, proprietary box systems, and point-of-sale displays. SW also became an integrated producer and sources raw materials through its own recycling and forestry operations, aligning with its commitment to the circular economy.
Smurfit Westrock plc (NYSE:SW) delivered a strong Q4 performance and achieved its previous full-year 2024 guidance of $4.706 billion adjusted EBITDA. The company has identified significant value-creating opportunities beyond the initial $400 million synergy target, with additional opportunities of at least $400 million through cost takeout and commercial approach improvements. The company has already taken decisive action by streamlining operations, with over 1,000 people leaving the company as part of their decentralization strategy and accountability model.
Looking ahead, Smurfit Westrock plc (NYSE:SW) has started 2025 well and anticipates delivering an adjusted EBITDA growth for the first quarter. The management team is focused on implementing a value-over-volume strategy and is committed to maintaining a strong investment-grade credit rating, targeting a long-term leverage ratio below 2x through the cycle. SW’s commitment to innovation, cost discipline, and quality has reinforced its position as not only the largest integrated player in their regions but also the most reliable packaging and supply chain partner for customers, which persuaded us to include it in the fifth place on our list of best paper stocks to consider.
4. Weyerhaeuser Company (NYSE:WY)
Number of Hedge Fund Holders: 37
Weyerhaeuser Company (NYSE:WY) is a US-based REIT and one of the largest private owners of timberlands in North America, managing approximately 10.4 million acres in the US alone and additional lands in Canada under long-term licenses. The company’s Timberlands segment focuses on sustainable forest management, including the harvesting and sale of logs for domestic and export markets. The Wood Products segment manufactures structural lumber, strand board, and engineered wood products and distributes building materials for both residential and commercial construction.
Weyerhaeuser Company (NYSE:WY) reported full-year 2024 GAAP earnings of $0.54 per diluted share on net sales of $7.1 billion, with adjusted EBITDA totaling $1.3 billion for the year. Despite challenging market conditions, the company made significant progress across multiple strategic initiatives, including growing Timberlands through acquisitions in Alabama, announcing plans to expand the engineered wood products portfolio, advancing the Natural Climate Solutions business, and capturing operational excellence improvements. The company returned $735 million to shareholders in 2024, including $153 million in share repurchases, while also increasing the base dividend by more than 5%.
A major strategic development for Weyerhaeuser Company (NYSE:WY) was the announcement of a $500 million investment to build a state-of-the-art facility in Arkansas, which is expected to generate over $100 million of annual adjusted EBITDA once fully operational. The Natural Climate Solutions business showed strong growth, with full-year adjusted EBITDA reaching $84 million, a 79% increase compared to 2023, and remains on track to reach $100 million of adjusted EBITDA by the end of 2025. The company demonstrated the durability of its portfolio and the flexibility of its capital allocation framework across market cycles, maintaining strong financial performance despite what was described as the most challenging lumber market in about 15 years. The large projects planned represent a great opportunity for WY to capitalize on a potential market recovery, which makes it one of the best paper stocks to buy now.
3. Magnera Corporation (NYSE:MAGN)
Number of Hedge Fund Holders: 47
Magnera Corporation (NYSE:MAGN) is a US-based specialty materials company formed in November 2024 through the merger of Glatfelter Corporation and Berry Global’s division named Treasure Holdco. The merger combined Glatfelter’s sustainable solutions and product portfolio with Treasure’s proprietary technologies and global scale, positioning the company as a global leader in growing markets serving major brand owners. MAGN produces engineered materials used in consumer and industrial applications, including components for absorbent hygiene products, protective apparel, wipes, filtration media, and specialty construction materials.
Magnera Corporation (NYSE:MAGN)’s financial performance shows some initial challenges, with a quarterly net loss of $60 million compared to an $8 million loss in the prior year period. Net sales increased significantly to $702 million from $519 million, primarily due to the aforementioned transaction, which contributed $186 million in revenue. Looking forward, management expects to realize annual synergies of $55 million net of incremental standalone costs and projects post-merger free cash flow of $75-95 million for fiscal year 2025, including $85 million of capital spending. Despite global macroeconomic challenges, including rising inflation, currency devaluation, and general market softness, management believes the underlying long-term demand fundamentals across all divisions will remain strong as they focus on providing advantaged products in targeted markets. We believe MAGN’s position will only get better once the divisions become fully integrated and synergies start to realize, and hence include the stock in 3rd place on our list of best paper stocks to consider.
2. Packaging Corporation of America (NYSE:PKG)
Number of Hedge Fund Holders: 51
Packaging Corporation of America (NYSE:PKG) is a leading US manufacturer of containerboard and corrugated packaging products. The company operates seven containerboard mills and more than 85 corrugated converting plants across the country. The Packaging segment produces over 4.5 million tons of containerboard annually and ships around 60.5 billion square feet of corrugated products, while the company’s Paper segment manufactures uncoated freesheet papers, including both commodity and specialty grades.
Packaging Corporation of America (NYSE:PKG) reported strong Q4 2024 results with a net income of $221 million ($2.45 per share) and record fourth-quarter sales of $2.1 billion. The company achieved record-breaking performance in both its packaging and paper segments, with the packaging business delivering record fourth-quarter total shipments and all-time record shipments per day. Full-year 2024 earnings, excluding special items, were $814 million ($9.04 per share), up from $784 million ($8.70 per share) in 2023, with net sales increasing to $8.4 billion from $7.8 billion.
Packaging Corporation of America (NYSE:PKG) is executing significant capital projects, including new box plant constructions and major reconfigurations, with capital expenditures projected at $840-870 million for 2025. PKG completed numerous high-return efficiency improvement projects in its corrugated products plants that will enable better optimization of the packaging business for future profitable growth and mix enhancement opportunities. Looking ahead to Q1 2025, although seasonally slower, the company expects volume in corrugated products plants to set new first-quarter records for total shipments and shipments per day, with bookings and billings already up 8% in January. With optimistic guidance ahead and 51 hedge funds owning the stock, PKG is one of the best paper stocks to buy.
1. International Paper Company (NYSE:IP)
Number of Hedge Fund Holders: 54
International Paper Company (NYSE:IP) is a leading global producer of fiber-based packaging and pulp products, operating manufacturing facilities across North America, Europe, Latin America, and Africa. IP’s primary business segments include industrial packaging (producing containerboard and corrugated boxes) and pulp, which supplies fluff, paper-grade, and specialty pulps. The company’s client base spans across industries like e-commerce, retail, and consumer goods.
Through the recent acquisition of DS Smith in 2025, International Paper Company (NYSE:IP) is positioned to become a global leader in sustainable packaging solutions focused on North America and EMEA markets. The company is implementing significant cost reduction initiatives, targeting $1.2 billion in net cost improvements, with approximately $120 million in annual corporate cost reductions and $110 million from facility closures already announced. IP’s commercial strategy reset is progressing as planned, with volume trends stabilizing and expected to show improvement in the latter half of 2025.
International Paper Company (NYSE:IP) is also making strategic investments to enhance its competitive position, including a new greenfield box plant in Iowa designed to deliver 20% lower costs and improved product quality. Management is focused on improving mill reliability and operational performance, addressing approximately $350 million in performance-related costs from 2024. The implementation of an 80/20 strategy has shown promising results in pilot locations, with 20% productivity gains, and will be expanded to 22 more box plants in 2025. These initiatives are part of a broader transformation aimed at creating a performance-driven, customer-centric culture to achieve $4 billion in EBITDA in the medium term.
Overall, International Paper Company (NYSE:IP) ranks first on our list of the 10 best paper stocks to buy according to hedge funds. While we acknowledge the potential of IP to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
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