Paper Stocks Poised for Growth: Why These Four Industry Leaders Are Winning Big

The paper and packaging sector is experiencing a significant upswing, driven by transformative market forces that are reshaping how companies approach materials and sustainability. Investors eyeing paper stocks should pay close attention to the fundamental shifts accelerating growth across the industry, particularly among integrated producers and specialized packaging manufacturers.

The Investment Case: Why Paper Stocks Matter Now

Four standout companies—Suzano (SUZ), Sylvamo (SLVM), International Paper (IP), and Klabin (KLBAY)—are capturing tailwinds that extend well into 2025 and beyond. These paper stocks benefit from a convergence of structural trends that institutional investors increasingly recognize as compelling opportunities for significant returns.

What’s Driving the Paper Industry Forward

The E-Commerce Explosion

The digital retail revolution continues to reshape demand fundamentals. In 2023, online commerce represented 19% of global retail sales, with projections indicating this share will reach 25% by 2027. This trajectory translates into massive implications for packaging: every product purchased online requires protective, sustainable packaging solutions. Industry forecasts point to global e-commerce revenues of $4,791 billion by 2025, expanding at a 7.83% compound annual growth rate through 2029. This expansion creates a structural floor for paper stocks performance.

Consolidation Reshaping Market Dynamics

Major merger activity is consolidating the industry’s fragmentation. The creation of Smurfit Westrock in July 2024—combining Smurfit Kappa and WestRock—demonstrated the scale advantages driving M&A. The combined entity operates across 42 countries with complementary product portfolios and strengthened sustainability credentials. Similarly, International Paper’s acquisition agreement for DS Smith signals a strategic geographic expansion and capability consolidation that will reshape competitive positioning.

Sustainability as a Performance Driver

Environmental consciousness among consumers and regulatory bodies is no longer optional—it’s foundational. Paper companies that successfully integrate recycled content into production processes, invest in breakthrough technologies, and prioritize sustainable packaging solutions are commanding premium valuations. This structural shift favors well-capitalized players with operational sophistication.

Pricing Power and Efficiency Gains

Rising input costs—transportation, chemicals, fuel—have prompted industry players to pursue strategic pricing actions while simultaneously investing in automation and operational improvements. This dual approach enables margin expansion without sacrificing competitive positioning.

Valuation Metrics: Paper Stocks Trading Below Historical Norms

The paper stocks sector trades at a forward 12-month EV/EBITDA of 9.24X, substantially below the S&P 500’s 13.96X and the Basic Materials sector’s 6.64X. Over five years, the industry has ranged from 7.82X to 16.26X, with a median of 10.33X—suggesting current valuations offer attractive entry points relative to historical precedent.

One-year performance underscores sector strength: paper stocks collectively gained 42.5% while the Basic Materials sector declined 1.8% and the S&P 500 advanced 26.8%. The Zacks Paper and Related Products industry holds Rank #41 among 250 industries, placing it in the top 16% of prospective performers.

The Four Key Paper Stocks to Monitor

Suzano (SUZ): Capacity Expansion Play

Suzano’s recent inauguration of the world’s largest single-line pulp mill in Ribas do Rio Pardo represents the company’s largest investment in its 100-year history. The facility produces 2.55 million tons annually, increasing Suzano’s total pulp capacity by 24% to 13.5 million tons yearly. The acquisition of industrial assets from Pactiv Evergreen in Arkansas and North Carolina positions SUZ as a major supplier of liquid packaging board materials in North America. Additional strategic moves include a 15% stake acquisition in Lenzing, expanding into cellulosic fibers for textiles and non-woven applications.

Earnings momentum is accelerating: the Zacks Consensus Estimate for 2025 has surged 39% in the past 60 days, projecting 364% year-over-year growth. Suzano carries a Zacks Rank #1 (Strong Buy) designation.

Sylvamo (SLVM): Operational Transformation

Project Horizon, Sylvamo’s comprehensive cost-reduction initiative, has already exceeded $110 million in targeted savings for 2024. Approximately $80 million derives from operational improvements across mills and supply chains; the remainder from administrative streamlining. This disciplined execution is strengthening the balance sheet while positioning SLVM for enhanced profitability.

The company anticipates favorable supply-demand dynamics in 2025 following recent capacity adjustments. A pipeline exceeding $200 million in high-return capital projects promises to accelerate earnings and cash flow expansion. SLVM has recorded an average trailing four-quarter earnings surprise of 16.7%, with 2024 estimates having moved north 10.5% in 60 days. The company maintains Zacks Rank #1 status with 4.2% long-term earnings growth expectations.

International Paper (IP): Strategic Consolidation and Geographic Expansion

International Paper’s pending acquisition of DS Smith—anticipated to close by Q1 2025—represents a pivotal strategic maneuver. The transaction is expected to generate at least $514 million in annual pre-tax cash synergies by year four post-closure and deliver earnings accretion immediately upon completion. This move strengthens IP’s corrugated packaging dominance in Europe while advancing sustainable packaging initiatives.

The company continues optimizing cost structures and investing in capacity additions for corrugated and containerboard products. IP’s trailing four-quarter earnings surprise averages 28.8%, with 2025 earnings estimates advancing 3.4% over 60 days—suggesting 156% year-over-year growth. International Paper carries Zacks Rank #2 (Buy) status.

Klabin (KLBAY): Production Ramp and Portfolio Expansion

Klabin’s trajectory reflects deliberate capacity expansion and market diversification. The Puma II project—commissioned in September 2023 with R$12.9 billion invested—introduced Paper Machines 27 and 28, adding 910,000 tons of annual production capacity. Critically, PM28 marked Klabin’s entry into the white paperboard segment, broadening its addressable market.

The Figueira corrugated cardboard factory in Piracicaba commenced operations, contributing 240,000 tons of annual production capacity and elevating KLBAY’s total conversion capacity to 1.2 million tons yearly. The restart of previously idled machines—PM1 and PM17 in June 2024—demonstrates improving market conditions and operational flexibility.

Earnings projections reflect these operational improvements: the 2025 Zacks Consensus Estimate has advanced 15% in 60 days to 68 cents per share, a dramatic improvement from the projected three cents for 2024. Klabin maintains Zacks Rank #2 status with 3.6% long-term earnings growth expectations.

The Bottom Line for Paper Stocks Investors

The confluence of e-commerce expansion, industry consolidation, sustainability imperatives, and operational excellence creates a compelling backdrop for paper stocks. These four companies—each executing distinctive but complementary strategies—are positioned to deliver substantial shareholder returns as the market recognizes the sector’s structural growth drivers and attractive valuation profile relative to both historical norms and broader equity indices.