We recently compiled a list of the 12 Best Land and Timber Stocks to Buy According to Analysts. In this article, we are going to take a look at where Greif, Inc. (NYSE:GEF) stands against the other best land and timber stocks.
The Land and Timber Sector: Current Trends and Future Outlook
The land and timber sector plays a vital role in both economic and environmental contexts. This sector not only provides essential materials like wood and paper but also significantly contributes to job creation and economic stability. The sector creates direct jobs, along with additional indirect and induced employment opportunities across various sectors such as logging, transportation, and manufacturing.
According to the American Forest and Paper Association, the forest products industry in the United States employs about 925,000 people directly. Additionally, it supports over 2 million jobs indirectly. This industry ranks among the top ten manufacturing employers in 43 states and contributes roughly 5% to the overall manufacturing GDP of the country.
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This sector encompasses activities related to forestry, logging, timberland management, and the production of wood products. It includes various processes such as harvesting trees, sawing logs into timber, and manufacturing wood-based products like furniture and paper. Timber companies play a vital role in managing forests sustainably. There is a growing shift towards more sustainable forestry practices and increased investment in timberland as an asset class. This trend is driven by a growing awareness of the environmental benefits of forestry. As consumers become more environmentally conscious, there is an increasing preference for products sourced from responsibly managed forests.
Another significant trend is the expansion of timber’s role in construction. With a focus on reducing carbon footprints, many builders are turning to timber as a renewable alternative to traditional materials like steel and concrete. Timber’s versatility allows it to be used in various applications, from residential homes to commercial buildings. Additionally, advancements in technology are streamlining operations within the industry, making logging and processing more efficient while minimizing environmental impact.
The J.P. Morgan Asset Management Timberland Outlook for 2024 indicates that cash yields and value growth for timberland assets are expected to grow, driven by housing and lumber demand. This trend is expected to continue into 2025 as interest rates gradually decline, making homes more affordable. Despite a slowdown in global saw timber demand in 2023 due to weaker economic activity in China and rising US interest rates, housing starts in the US remained robust. The ongoing shortage of homes, combined with low existing home sales, has increased the need for new construction.
Looking ahead, J.P. Morgan Asset Management anticipates strong cash yields from timberland assets, with prices and yields expected to rise further in 2025 and beyond. As the demand for sustainable investments grows, timberland is seen as a valuable asset class that can provide both economic benefits and contribute to climate solutions.
Methodology
To compile our list of the 12 best land and timber stocks to invest in according to analysts, we reviewed financial media reports and consulted various online resources including timber ETFs. We focused on the top land and timber stocks that analysts believe have the most potential for growth. We ranked the 12 best land and timber stocks to invest in based on their average price target upside potential according to analysts as of December 27, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Greif, Inc. (NYSE:GEF)
Average Price Target Upside Potential According to Analysts: 25.40%
Number of Hedge Fund Holders: 15
Greif, Inc. (NYSE:GEF) is a global leader in manufacturing industrial packaging products and services. The company produces a variety of items, including steel, plastic, and fiber drums, jerrycans, intermediate bulk containers, corrugated boxes, and various types of paperboard. The company also offers packaging accessories and services to various industries such as food and beverage, agriculture, chemicals, and pharmaceuticals. The company’s land management subsidiary, Soterra, offers timberland management services. Soterra manages over 240,00 acres of land in the Southeastern US. Greif Inc. (NYSE:GEF) is one of the best land stocks to buy according to analysts.
In the fiscal fourth quarter of 2024, the company reported a net income of $63.4 million, down 6.5% from $67.8 million in the same period last year. The company’s performance was influenced by the ongoing challenges in the industrial sector. On a positive note, in the Paper Packaging & Services segment, Greif Inc. (NYSE:GEF) saw an increase in net sales by $42.9 million, reaching a total of $624.5 million. This growth was mainly due to higher average selling prices linked to increased costs of containerboard and boxboard products.
The company is actively pursuing growth and profitability through strategic initiatives. Greif Inc. (NYSE:GEF) has announced a cost optimization plan aimed at eliminating $100 million in structural costs by 2027 through improved operational efficiencies and network optimization.
Additionally, in September 2024, Greif Inc. (NYSE:GEF) opened a new facility in Pasir Gudang, Malaysia, focusing on manufacturing Intermediate Bulk Containers (IBCs). This expansion underscores the company’s commitment to enhancing its packaging solutions and growing its business. With its diverse product offerings, strategic land management practices, and proactive growth strategies, Greif Inc. (NYSE:GEF) is well-positioned for future success in the land and timber sector, making it an appealing investment opportunity.
Overall, GEF ranks 5th on our list of the best land and timber stocks to buy according to analysts. While we acknowledge the potential of GEF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GEF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.