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2 Paper and Related Products Stocks to Watch Amid Industry Challenges
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The Zacks Paper and Related Products industry has been grappling with subdued demand due to lower consumer spending amid inflation and declining graphic paper demand due to the shift toward digitalization. However, increasing packaging requirements due to the rise in e-commerce activities and steady demand from consumer-oriented end markets, such as food and beverages, and healthcare, are expected to support the industry. Increasing environmental awareness is boosting the appeal of paper as a sustainable and eco-friendly packaging alternative, serving as a major growth driver.
Companies like Suzano (SUZ - Free Report) and Stora Enso Oyj (SEOAY - Free Report) are likely to gain from the above-mentioned trends.
Industry Description
The Zacks Paper and Related Products industry comprises companies that manufacture and sell paper and paper products. The industry is highly diversified in terms of products, ranging from graphic paper and packaging paper to absorbent hygiene products. Graphic papers, which include printing and writing papers, and newsprint, are utilized for communication purposes. The industry provides packaging solutions for liquid, food, pharmaceutical, beauty, household, commercial and industrial products. It also produces fluff and specialty pulps utilized in absorbent hygiene products, tissues and paper products. The industry caters to a wide array of industries, including food and beverage, farming, home and personal care, health, retail, e-commerce, and transport. The industry players meet customers’ shipping, storage and display requirements with sustainable solutions.
Major Trends Shaping the Future of the Paper and Related Products Industry
Weak Demand, High Costs & Tariffs Remain Concerns: The transition to digital media has undermined the demand for the graphic paper market for some time now. Paperless communication, increased use of email, less print advertising, electronic billing and fewer catalogs have dented graphic paper demand. This shift has prompted companies in the industry to convert their production lines to focus on packaging and specialty paper to stay relevant. However, the packaging demand has also lately been impacted and the companies in the industry have been witnessing volume declines due to lower consumer spending on goods, reflecting the inflationary scenario. They had to cut down production levels to align with customer demand. The industry is witnessing rising costs for transportation, chemicals and fuel. Thus, industry players are increasingly focusing on pricing actions and cost reduction, and resorting to automation in manufacturing to boost productivity and efficiency. The impacts of tariffs add to the industry’s concerns.
E-commerce & Consumer Products to Support Packaging Demand: Despite the current headwinds, the industry’s exposure to consumer-focused markets, such as food, beverages and healthcare, ensures stable earnings growth. With the rise of e-commerce, packaging has gained the utmost importance as it helps maintain the integrity of the products and withstand the complexities of delivery. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Additionally, advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Paper and Related Products industry.
Increased M&A Activities to Transform the Paper & Packaging Landscape:Increasing demand for sustainable packaging options and eco-friendly packaging solutions will support the paper market in the days ahead. Smurfit Westrock Plc was formed by merging two major paper and packaging industry players, Smurfit Kappa and WestRock in July 2024. With an unmatched geographic reach spanning 42 countries and the two companies’ highly complementary portfolios and innovative sustainability capabilities, Smurfit Westrock is likely to be the preferred packaging partner for companies and customers across the globe. In January 2025, International Paper acquired DS Smith, creating a new global leader in sustainable packaging solutions, focusing on the North America and EMEA markets. The merger creates a stronger portfolio of sustainable packaging solutions and enhances offerings, innovation and geographic presence.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Paper and Related Products industry is a 10-stock group within the broader Basic Materials sector. The industry currently carries a Zacks Industry Rank #223, which places it in the bottom 7% of the 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few Paper and Related Products stocks that investors can consider, it is worth looking at the industry’s stock-market performance and valuation picture.
Industry Versus Broader Market
The Paper and Related Products industry has underperformed the sector and the S&P 500 over the past year. The stocks in this industry have declined 20.6%, while the Basic Materials sector has moved up 28.2%. The S&P 500 composite has grown 16.1% during this time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Paper and Related Products companies, we see that the industry is currently trading at 7.98X compared with the S&P 500’s 18.56X and the Basic Material sector’s trailing 12-month EV/EBITDA of 14.85X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Over the last five years, the industry has traded as high as 12.45X and as low as 5.10X, with the median being 8.36X.
2 Paper and Related Products Stocks to Consider
Suzano: In June, the company entered into an agreement with Kimberly-Clark Corp. (“KMB”) to form a $3.4 billion joint venture focused on the manufacture, marketing and distribution of consumer and professional tissue products across 70 countries. Suzano will acquire a 51% stake in the venture. The deal, expected to close in mid-2026, involves 22 tissue plants with an annual production capacity of 1 million tons. Suzano is already a leading player in toilet paper in Brazil, following its 2023 acquisition of Kimberly-Clark’s Brazilian tissue assets and brands. Since then, the consumer goods segment has played a more significant role in its paper business results. The company has been steadily growing its presence in the Brazilian market. In July 2024, Suzano constructed a pulp production mill in the state of Mato Grosso do Sul (known as Cerrado Project) with a nominal capacity of 2,550,000 tons of eucalyptus pulp per year, aligning with its long-term strategy to meet the growing demand for hardwood pulp. The company recently started production at its new tissue paper mill at Aracruz. Following an investment of R$650 million ($115 million), it adds 60,000 tons of annual capacity to its Consumer Goods Unit and is also expected to cut logistic costs. Suzano is also aiming to scale operations to meet the growing global demand for paper-based packaging. In October 2024, SUZ acquired two industrial assets from Pactiv Evergreen in Arkansas and North Carolina, United States. These assets manufacture liquid packaging board and cupstock, adding approximately 420,000 metric tons annually of integrated paperboard to Suzano’s production capacity. These assets, currently operating as Suzano Packaging US, delivered their first positive adjusted EBITDA of R$43 million in the third quarter of 2025.
The Zacks Consensus Estimate for 2025 earnings for the Salvador, Brazil-based company has moved up 0.5% in the past 60 days and indicates year-over-year growth of around 310.6%. The company currently carries a Zacks Rank #3 (Hold).
Stora Enso: In May 2025, the company sold 12.4% of its total forest assets of 1.75 million hectares in Sweden for €900 million. Following the divestment, Stora Enso retains more than 1.2 million hectares of forest land in Sweden, with a fair value of approximately EUR 5.6 billion. Following a strategic review, the company announced that it will separate the forest assets business into a separate company as part of its stronger focus on renewable materials and packaging. The company’s Oulu site, the largest and most modern consumer packaging board production line in Europe, was inaugurated in September 2025. The line is expected to reach full capacity in 2027. This will support SEOAY’s long-term strategy to build market share in renewable and circular packaging solutions, which matter the most to its customers. The company’s proactive initiatives to improve profitability, cash flow and cost competitiveness through activities related to sourcing, operational efficiency, commercial excellence, working capital and fixed costs will aid results in the forthcoming quarters.
The Zacks Consensus Estimate for 2025 earnings for the Helsinki, Finland-based company has moved up 25% in the past 60 days. The consensus estimate for Stora Enso indicates year-over-year growth of 182%. The company has a trailing four-quarter earnings surprise of 30%, on average. SEOAY currently has a Zacks Rank of 3.
Price & Consensus: SEOAY
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2 Paper and Related Products Stocks to Watch Amid Industry Challenges
The Zacks Paper and Related Products industry has been grappling with subdued demand due to lower consumer spending amid inflation and declining graphic paper demand due to the shift toward digitalization. However, increasing packaging requirements due to the rise in e-commerce activities and steady demand from consumer-oriented end markets, such as food and beverages, and healthcare, are expected to support the industry. Increasing environmental awareness is boosting the appeal of paper as a sustainable and eco-friendly packaging alternative, serving as a major growth driver.
Companies like Suzano (SUZ - Free Report) and Stora Enso Oyj (SEOAY - Free Report) are likely to gain from the above-mentioned trends.
Industry Description
The Zacks Paper and Related Products industry comprises companies that manufacture and sell paper and paper products. The industry is highly diversified in terms of products, ranging from graphic paper and packaging paper to absorbent hygiene products. Graphic papers, which include printing and writing papers, and newsprint, are utilized for communication purposes. The industry provides packaging solutions for liquid, food, pharmaceutical, beauty, household, commercial and industrial products. It also produces fluff and specialty pulps utilized in absorbent hygiene products, tissues and paper products. The industry caters to a wide array of industries, including food and beverage, farming, home and personal care, health, retail, e-commerce, and transport. The industry players meet customers’ shipping, storage and display requirements with sustainable solutions.
Major Trends Shaping the Future of the Paper and Related Products Industry
Weak Demand, High Costs & Tariffs Remain Concerns: The transition to digital media has undermined the demand for the graphic paper market for some time now. Paperless communication, increased use of email, less print advertising, electronic billing and fewer catalogs have dented graphic paper demand. This shift has prompted companies in the industry to convert their production lines to focus on packaging and specialty paper to stay relevant. However, the packaging demand has also lately been impacted and the companies in the industry have been witnessing volume declines due to lower consumer spending on goods, reflecting the inflationary scenario. They had to cut down production levels to align with customer demand. The industry is witnessing rising costs for transportation, chemicals and fuel. Thus, industry players are increasingly focusing on pricing actions and cost reduction, and resorting to automation in manufacturing to boost productivity and efficiency. The impacts of tariffs add to the industry’s concerns.
E-commerce & Consumer Products to Support Packaging Demand: Despite the current headwinds, the industry’s exposure to consumer-focused markets, such as food, beverages and healthcare, ensures stable earnings growth. With the rise of e-commerce, packaging has gained the utmost importance as it helps maintain the integrity of the products and withstand the complexities of delivery. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Additionally, advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Paper and Related Products industry.
Increased M&A Activities to Transform the Paper & Packaging Landscape:Increasing demand for sustainable packaging options and eco-friendly packaging solutions will support the paper market in the days ahead. Smurfit Westrock Plc was formed by merging two major paper and packaging industry players, Smurfit Kappa and WestRock in July 2024. With an unmatched geographic reach spanning 42 countries and the two companies’ highly complementary portfolios and innovative sustainability capabilities, Smurfit Westrock is likely to be the preferred packaging partner for companies and customers across the globe. In January 2025, International Paper acquired DS Smith, creating a new global leader in sustainable packaging solutions, focusing on the North America and EMEA markets. The merger creates a stronger portfolio of sustainable packaging solutions and enhances offerings, innovation and geographic presence.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Paper and Related Products industry is a 10-stock group within the broader Basic Materials sector. The industry currently carries a Zacks Industry Rank #223, which places it in the bottom 7% of the 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few Paper and Related Products stocks that investors can consider, it is worth looking at the industry’s stock-market performance and valuation picture.
Industry Versus Broader Market
The Paper and Related Products industry has underperformed the sector and the S&P 500 over the past year. The stocks in this industry have declined 20.6%, while the Basic Materials sector has moved up 28.2%. The S&P 500 composite has grown 16.1% during this time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Paper and Related Products companies, we see that the industry is currently trading at 7.98X compared with the S&P 500’s 18.56X and the Basic Material sector’s trailing 12-month EV/EBITDA of 14.85X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Over the last five years, the industry has traded as high as 12.45X and as low as 5.10X, with the median being 8.36X.
2 Paper and Related Products Stocks to Consider
Suzano: In June, the company entered into an agreement with Kimberly-Clark Corp. (“KMB”) to form a $3.4 billion joint venture focused on the manufacture, marketing and distribution of consumer and professional tissue products across 70 countries. Suzano will acquire a 51% stake in the venture. The deal, expected to close in mid-2026, involves 22 tissue plants with an annual production capacity of 1 million tons. Suzano is already a leading player in toilet paper in Brazil, following its 2023 acquisition of Kimberly-Clark’s Brazilian tissue assets and brands. Since then, the consumer goods segment has played a more significant role in its paper business results. The company has been steadily growing its presence in the Brazilian market. In July 2024, Suzano constructed a pulp production mill in the state of Mato Grosso do Sul (known as Cerrado Project) with a nominal capacity of 2,550,000 tons of eucalyptus pulp per year, aligning with its long-term strategy to meet the growing demand for hardwood pulp. The company recently started production at its new tissue paper mill at Aracruz. Following an investment of R$650 million ($115 million), it adds 60,000 tons of annual capacity to its Consumer Goods Unit and is also expected to cut logistic costs. Suzano is also aiming to scale operations to meet the growing global demand for paper-based packaging. In October 2024, SUZ acquired two industrial assets from Pactiv Evergreen in Arkansas and North Carolina, United States. These assets manufacture liquid packaging board and cupstock, adding approximately 420,000 metric tons annually of integrated paperboard to Suzano’s production capacity. These assets, currently operating as Suzano Packaging US, delivered their first positive adjusted EBITDA of R$43 million in the third quarter of 2025.
The Zacks Consensus Estimate for 2025 earnings for the Salvador, Brazil-based company has moved up 0.5% in the past 60 days and indicates year-over-year growth of around 310.6%. The company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: SUZ
Stora Enso: In May 2025, the company sold 12.4% of its total forest assets of 1.75 million hectares in Sweden for €900 million. Following the divestment, Stora Enso retains more than 1.2 million hectares of forest land in Sweden, with a fair value of approximately EUR 5.6 billion. Following a strategic review, the company announced that it will separate the forest assets business into a separate company as part of its stronger focus on renewable materials and packaging. The company’s Oulu site, the largest and most modern consumer packaging board production line in Europe, was inaugurated in September 2025. The line is expected to reach full capacity in 2027. This will support SEOAY’s long-term strategy to build market share in renewable and circular packaging solutions, which matter the most to its customers. The company’s proactive initiatives to improve profitability, cash flow and cost competitiveness through activities related to sourcing, operational efficiency, commercial excellence, working capital and fixed costs will aid results in the forthcoming quarters.
The Zacks Consensus Estimate for 2025 earnings for the Helsinki, Finland-based company has moved up 25% in the past 60 days. The consensus estimate for Stora Enso indicates year-over-year growth of 182%. The company has a trailing four-quarter earnings surprise of 30%, on average. SEOAY currently has a Zacks Rank of 3.
Price & Consensus: SEOAY