Why buy Mercer International Inc. (NASDAQ: MERC) stock in 2025?
Mercer International Inc. is a global producer of bleached wood pulp (NBSK and NBHK), green energy, and related products such as sawn timber, pellets, and lignin. With operations in Germany, the US, and Canada, the company is positioned in a key sector: renewable forest products. By the end of 2025, its shares are trading around $1.70-$2.00, historically low levels that could represent a value opportunity for patient investors.
One of its main attractions is its dividend. Mercer maintains a quarterly payout of $0.075 per share (annualized $0.30), offering a yield of over 10-14% based on the current price. This is exceptionally high compared to the market average, making it an attractive option for those seeking passive income, provided the company can sustain it despite financial challenges.
In December 2025, Mercer announced the start of operations for a demonstration CO₂ capture unit at its Peace River mill in Alberta, in collaboration with Svante Technologies. This project advances its sustainability strategy, aligned with goals validated by Science Based Targets. In a world increasingly focused on decarbonization, initiatives like this could generate carbon credits, new revenue, and long-term value, differentiating the company in the green transition.
The pulp and paper sector is showing moderate growth: the global market is projected to reach $394-400 billion in 2025, with a CAGR of 1.7-3.8% through 2034, driven by sustainable packaging and demand in Asia. Mercer is also diversifying into mass timber, a segment expanding due to its use in green building.
However, it's not all positive. In Q3 2025, MERC reported a net loss of $80.8 million (EPS -$1.21), negative EBITDA of $28.1 million, and revenues of $458 million below expectations, due to low pulp prices and weak demand. The stock has fallen significantly, reflecting risks such as high debt and cyclical commodity volatility.
For investors with a higher risk tolerance, MERC could be a recovery bet: historically low prices, high yield, and a focus on sustainability. Analysts are holding a "Hold" with targets around $3 (potential upside >50%). If the pulp cycle improves in 2026 and costs are controlled (the "One Goal One Hundred" program aims for $100 million in savings), the stock could appreciate. I recommend diversifying and monitoring future results. Invest with caution: the potential is there, but the risks are high.
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