In this article, we will discuss 9 Best Lumber Stocks to Invest In Now.
Lumber stocks provide investors with exposure to a critical commodity that serves as both a long-term growth opportunity and an inflation hedge. Driven by ongoing demand for housing, renovation, and infrastructure, these companies benefit when lumber prices rise, creating potential for significant capital gains. Many timberland REITs and lumber producers also pay dividends, offering income generation in addition to growth, while their commodity-based nature can provide portfolio diversification away from traditional sectors like technology and finance. Regulatory constraints and limited supply in the industry can further support pricing, particularly during periods of high demand, enhancing the appeal of well-positioned companies.
The long-term fundamentals for the lumber sector remain solid. Housing recovery, continued residential and commercial construction, and DIY trends all support steady demand for wood products. Even amid volatility, companies with disciplined cost management, diversified operations, and strategic exposure to high-demand regions can capitalize on market rebounds.
Investing in lumber stocks is not without risk. Profitability is closely tied to fluctuating lumber prices, housing cycles, and global trade dynamics, including tariffs, which can create short-term volatility. Paper-exposed businesses face structural headwinds from declining demand, and some sawmills have struggled in 2025 amid these pressures.
Despite these challenges, the combination of inflation protection, resilient demand, dividend income, and potential upside from improving housing and construction trends makes lumber stocks an attractive opportunity for growth-focused investors willing to tolerate cyclical volatility. In other words, for those seeking both income and capital appreciation, the long-term benefits outweigh the risks in this sector.
With this context in mind, here is a list of the 9 best lumber stocks to invest in now.
Our Methodology
For this article, we sifted through online rankings to extract a list of the best lumber stocks to invest in now. From the resultant dataset, we chose 9 stocks with the highest number of hedge fund investors. Next, we ranked those stocks in ascending order based on the number of hedge funds holding stakes in each stock as of Q3 2025 using Insider Monkey’s hedge fund database. We have used the stock’s market cap as of February 12 as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
9 Best Lumber Stocks to Invest In Now
9. Mercer International Inc. (NASDAQ:MERC)
Number of Hedge Fund Holders: 19
Market Capitalization: $115.88 million
On January 21, TD Cowen downgraded Mercer International Inc. (NASDAQ:MERC) to Sell from Hold and raised its price target to $2.25 from $2, citing high leverage and expected negative free cash flow despite pulp markets approaching a cyclical floor. The firm believes the recent share price rebound appears difficult to justify given the limited near-term deleveraging pathways.
During its third-quarter 2025 earnings call, Mercer International Inc. (NASDAQ:MERC) reported negative EBITDA of $28 million, including a $20 million non-cash inventory impairment, compared to negative EBITDA of $21 million in the prior quarter. Management outlined plans to deliver $30 million in cost savings and reliability improvements by the end of 2025 as part of a broader initiative targeting $100 million in profitability improvement by the end of 2026. The company’s mass timber segment has built an $80 million order backlog and is expected to see improved performance in 2026 as markets recover. While near-term financial pressures remain, Mercer’s cost-reduction initiatives, operational leverage to a pulp recovery, and growing engineered wood backlog provide upside potential if pricing stabilizes, offering speculative investors exposure to a cyclical rebound opportunity.
Mercer International Inc. (NASDAQ:MERC) operates through its two segments: Pulp and Wood Products to manufacture northern bleached softwood kraft pulp and operates pulp and wood product facilities across multiple regions. The company was founded in 1968 and is headquartered in Vancouver, Canada.
8. West Fraser Timber Co. Ltd. (NYSE:WFG)
Number of Hedge Fund Holders: 19
Market Capitalization: $5.89 billion
On January 14, Raymond James upgraded West Fraser Timber Co. Ltd. (NYSE:WFG) to Outperform from Market Perform and raised its price target to $75 from $70, citing improving industry fundamentals. The firm believes forest products likely bottomed in 2025 following a prolonged downturn, leaving valuations compressed and positioning the group for potential upside in 2026. Tightening lumber and oriented strand board supply, limited new capacity, and discounted equity prices skew the risk/reward profile favorably despite ongoing housing market volatility.
On February 11, West Fraser Timber Co. Ltd. (NYSE:WFG) reported fourth-quarter 2025 sales of $1.165 billion and a net loss of $751 million, largely driven by $712 million in restructuring and impairment charges. Full-year sales totaled $5.462 billion with a net loss of $937 million, while adjusted EBITDA declined to $56 million for the year amid oversupplied southern yellow pine and oriented strand board markets, elevated duties, and new U.S. tariffs. Despite near-term margin pressure and mill curtailments, the company continued advancing major capital projects and maintained shareholder returns through dividends and buybacks. With restructuring actions largely recognized and supply discipline improving across the industry, West Fraser appears positioned to benefit from any cyclical recovery in North American housing and construction demand, offering leveraged upside as pricing conditions normalize.
Founded in 1955 and headquartered in Vancouver, West Fraser Timber Co. Ltd. (NYSE:WFG) is a diversified wood products manufacturer producing lumber, oriented strand board, plywood, pulp, and other building materials.
