International Paper Company (IP), Packaging Corp Of America (PKG), MeadWestvaco Corp. (MWV): Making Paper for Your Portfolio

MeadWestvaco Corp. (NYSE:MWV) is another major paper maker. The company is expected to see sales up 3% in 2013 and 2014. Thus, MeadWestvaco is working to reduce costs across the board. This is expected to save between $65 and $75 million in costs by the end of 2014. MeadWestvaco Corp. (NYSE:MWV) is eliminating various product lines while expanding in new areas.

This includes expansion in Brazil. The company has invested over $480 million for a paperboard machine that will double the capacity of its Tres Barras mill. The investment in Brazil is expected to boost revenue by 50% and more than double the operating earnings of the industrial segment. Other key areas of expansion include India. MeadWestvaco Corp. (NYSE:MWV) purchased Ruby Macons, India’s market leader in corrugated materials.

IP still only trades at 20 times earnings, below the major peers…

And what’s more is that the stock trades at only 11 times forward earnings and offers investors a 2.3% dividend yield. I’m not a huge fan of the paper business, but with Loeb, I’ll make an exception. However, I’ll be avoiding Packaging Corp Of America (NYSE:PKG) and MeadWestvaco Corp. (NYSE:MWV) due to their low growth prospects.