The growth of the paper industry is being fueled by rising consumer packaging demand on account of growing e-commerce trends and online sales of pulp and paper products. Furthermore, an increasing awareness of environmental issues, such as biodegradability, global warming, and health issues generated by…
plastic packaging materials, is expected to boost the paper market’s growth significantly.
The increased use of hygiene and sanitary products, such as tissue paper, napkins, and paper towels, is also driving the paper products market’s growth. The global paper products market is expected to grow at a0.32% CAGR through 2028.
Given this promising outlook, we think it could be worth investing in fundamentally sound paper stocks Suzano S.A. (SUZ – Get Rating) and Mercer International Inc. (MERC – Get Rating). These stocks have outperformed the broader market year-to-date and still hold significant upside potential.
Headquartered in Salvador, Brazil, SUZ produces and sells eucalyptus pulp and paper products in Brazil and internationally. Pulp and Paper are the company’s two operational segments. SUZ offers coated and uncoated printing and writing papers, paperboards, tissue papers, market and fluff pulps, and lignin and its byproducts.
SUZ’s net revenue has increased 43.1% year-over-year to R$11.47 billion ($2.41 billion) during the fourth quarter, ending Dec. 31, 2021. Its net income amounted to R$2.31 billion ($485.54 million), while its adjusted EBITDA increased 60.3% from its year-ago value to R$6.36 billion ($1.33 billion). Its cash and cash equivalents stood at R$13.59 billion ($2.85 billion) for its fiscal year, ending Dec. 31, 2021.
Analysts expect SUZ’s revenue to increase 27.5% year-over-year to $2.14 billion in the first quarter, ending March 31, 2022. The stock has gained 11% in price year-to-date and 19.9% over the past six months.
SUZ’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SUZ is also rated a A grade for Sentiment and B for Growth and Quality. Within the A-rated Industrial – Paper industry, it is ranked #5 of 15 stocks.
To see additional POWR Ratings for Value, Stability, and Momentum for SUZ, click here.
Headquartered in Vancouver, Canada, MERC and its subsidiaries manufacture and sell northern bleached softwood kraft (NBSK) pulp internationally. The company has two operational segments: Pulp and Wood Products. It also generates and sells green energy produced from…
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