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The Zacks Analyst Blog Highlights: Domtar Corp, Mercer International, Veritiv Corp, DS Smith, Mondi and Stora Enso

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For Immediate Release

Chicago, IL – April 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Domtar Corporation (UFS - Free Report) , Mercer International Inc. (MERC - Free Report) , Veritiv Corporation (VRTV - Free Report) , DS Smith plc (DITHF - Free Report) , Mondi plc (MONDY - Free Report) and Stora Enso Oyj (SEOAY - Free Report) .

Here are highlights from Tuesday’s Analyst Blog:

Time to Bet On Paper & Related Products Industry

The pandemic has impacted different industries in different ways. But it has been a mixed bag for players in the pulp and paper industry. I say that because these companies supply materials into varied markets, not all of which were impacted the same way by the pandemic.

For example, the industrial use of paper and pulp sank in 2020, as shutdowns and then social distancing and safety norms impacted manufacturing. Similarly, the work from home model impacted demand for office stationery. Certain consumer uses also declined when people realized that it is easier to sanitize plastic, effectively putting their environmental concerns on the back burner. As people reduced food consumption at restaurants, foodservice demand also declined.

But that's not all that happened. Demand also surged in some areas, the most significant of which was ecommerce. As people turned online for most of their needs, the demand for corrugated paper packaging that is used to transport these things, went through the roof.  

Plus, the need to eat at home increased demand for paper boxes, straws, paper bags, food packaging papers, etc. Another segment that saw extremely high demand was personal hygiene paper products like disposable paper towels, disinfectant wipes, face masks, etc. Packaging for medical products was also relatively steady.

It's not hard to see that as people start visiting public places more frequently, some of this demand will readjust. But it's also equally true that not all of the demand that arose because of the pandemic will go away immediately. Therefore, it does appear that this industry will see some nice growth going forward.

But this doesn't need to be a guessing game either. A report from ResearchAndMarkets on the "Paper Products Global Market Report 2020-30: COVID-19 Impact and Recovery" states that the market, which is expected to have declined 3.1% last year will however grow at a CAGR of 7% from 2021 to 2023 to reach $1030.7 billion.

How individual companies coped with the pandemic depended on their exposure to the different segments and geographic regions. But since we know that it isn't their past performance but their future prospects that drives our returns, we should perhaps take note of the fact that these prospects look increasingly rosy. That's probably why the industry is in the top 8% of Zacks-classified industries.

Here are a few stocks that offer exposure to the segment-

Domtar Corp.

Domtar manufactures and distributes a wide array of fiber-based products including communication papers, specialty and packaging papers and absorbent hygiene products. It also owns and operates a network of strategically-located paper and printing supplies distribution facilities.

The Zacks Rank #1 company has a Value Score B and Growth Score B.

The company won't report until May 6. But the lone analyst providing estimates at this point expects earnings to increase from just 2 cents in 2020 to $3.70 this year (although revenue is still expected to decline 9.4%).

Mercer International

Mercer International owns and operates a diverse pulp and paper business in the southern German states of Saxony and Thuringia, in the former East Germany.

The Zacks Rank #1 company has a Value Score B and Growth Score B.

The company reports on Apr 29. Current year EPS is expected to increase from a loss of 26 cents last year to a profit of $1.99 this year.

Veritiv Corp.

Veritiv Corporation offers North American business-to-business packaging, print and print management, publishing, supply chain, facility and logistics solutions spanning the entire lifecycle of core business operations. The company has customers across the manufacturing, healthcare, retail and other industries.

The Zacks Rank #1 company has a Value Score A and Growth Score A.

The company reports on May 5. Current year EPS is expected to increase 29.8% from $2.08 last year to a profit of $2.70 this year.

DS Smith

DS Smith plc is a manufacturer of corrugated products primarily in Europe. The company's division consists of paper, plastics, packaging and recycling.

The Zacks Rank #2 company has a Value Score A and Growth Score C.

Current year (ending April) EPS is expected to drop 23.8%. 2022 EPS is expected to grow 35.9%.

Mondi

Mondi plc manufactures and sells packaging and paper products. Its products include containerboards, sack kraft papers, specialty kraft papers, corrugated packaging products, industrial bags, extrusion coatings, films and hygiene components, release liners, office and printing papers and graphic printing papers as well as pre-made bags and pouches, printed laminates and high-barrier films. The company operates primarily in central Europe, Russia, North America and South Africa. Mondi plc is based in Addlestone, the United Kingdom.

The Zacks Rank #2 company has a Value Score B and Growth Score B.

2021 EPS is expected to grow 11.9% and 2022 EPS is expected to grow 17.1%.

Stora Enso

Stora Enso is an integrated forest products company producing magazine papers, newsprint, fine papers and packaging boards. It also has extensive sawmilling operations. To strengthen its market position and better serve customers in the United States, the company acquired the U.S.-based, Consolidated Papers, Inc. in 2000.

The Zacks Rank #2 company has a Value Score B and Growth Score B.

2021 EPS is expected to grow 127.5% and 2022 EPS is expected to grow 14.7%.

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