NEW YORK ( TheStreet) -- Latest data from the American Forest & Paper Association show that containerboard, boxboard, unbleached Kraft, and solid bleached folding paperboard production for February 2011 increased phenomenally from the year-ago month, indicating improved demand. Meanwhile, many paperboard producers like Caraustar Industries ( CSAR), Rock-Tenn ( RKT) and Sonoco Products ( SON) have already announced price increases effective April 2011.

An industry analyst believes that while on one hand, prices for a few paper grades have already touched highs, the paper industry on the whole is still only halfway through its upward cycle. Furthermore, Bill Moore, a paper-recycling consultant with Moore & Associates, forecasts that going forward, he remains bullish for the recovered paper and finished paper markets. Thereby, he foresees a solid footing for the paper industry in the future.

A forest products industry analyst believes that despite challenges like tightening margins, factors like energy prices, capacity management at paper mills and a 2% growth in the economy would support exceptional growth in the paper industry. Additionally, recovered fiber purchases by Chinese mills reflect no signs of a slowdown.

Based on analysts' consensus estimates polled by Bloomberg, these six stocks from the paper industry have upsides ranging from 14% to 31% over the next 12 months, with strong buy and hold ratings. These companies reported a robust earnings quarter and fundamentals continue positive.

6. Fibria Celulose ( FBR), a Brazil-based market pulp producer, is engaged in the production of bleached eucalyptus Kraft pulp at three pulp mills -- the Aracruz, Tres Lagoas, and Jacarei units. The company's forest base is diversified and comprises of a land area of almost 1.043 million hectares located across six Brazilian states.

Of the 14 analysts covering the stock, 50% recommend a buy, whereas 29% rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 14% to $17.2 in the upcoming 12 months.

For first quarter of 2011, the company reported a 2% year-over-year increase in revenue to $0.96 billion, attributable to higher average pulp and paper prices. Net income for the quarter multiplied to $241 million from $5.6 million in the year-ago quarter. Net debt narrowed 27% year-over-year to $4,930 million. The company's first quarter results reflected a non-recurrent gain from the sale of assets.

During the quarter, the company sold its stake in the assets of Consorcio Paulista de Papel e Celulose (Conpacel) and KSR to Suzano Papel e Celulose for $0.92 billion. The sale contributed towards the 140% increase in first-quarter net income. The company recently paid its obligatory dividends amounting to $75.5 million (16 cents per share) and $88.1 million (19 cents per share) for 2009 and 2010, respectively.

5. Rock-Tenn ( RKT) is a manufacturer of packaging products, recycled paperboard, containerboard, bleached paperboard and merchandising displays. It operates through 95 facilities located across 27 states. Broadly, it has four segments: consumer packaging, corrugated packaging, merchandising displays, and specialty paperboard products.

Of the eight analysts covering the stock, 63% recommend a buy while 25% rate a hold. Analysts polled by Bloomberg foresee the stock gaining an average 14.5% to $77.6 in the upcoming 12 months.

For the second quarter of 2011 ending March 31, 2011, the company recorded 8.3% increase in net sales to $792.9 million as compared to the-year ago quarter. Meanwhile, adjusted earnings per diluted share increased 49% to $1.04 from 70 cents in the earlier period. Led by higher sales volumes (up 18,531 tons) and pricing (rising $59 per ton) in the consumer and corrugated packaging segments from the year-ago quarter, free cash flow expanded, thereby reducing net debt by $46 million. Besides, the company has also invested $32 million in its business.

The company recently declared a dividend of 20 cents per share for its Class A Common Stock, payable on May 23, 2011, and representing an annual dividend of 80 cents per share. Looking ahead to 2011, the company reaffirmed its EBITDA guidance of $530 to $540 million.

4. International Paper ( IP), a global paper and packaging company, markets and manufactures paper with operations located across North America, Europe, Latin America, Russia, Asia and North Africa. It operates in five segments: industrial packaging, printing papers, and consumer packaging, distribution, and forest products. As of Dec. 31, 2010, IP operated 20 pulp, paper and packaging mills, 144 converting and packaging plants, 19 recycling plants and three bag facilities.

Of the 15 analysts covering the stock, 73% recommend a buy, while 13% rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 15.1% to $36.4 in the upcoming 12 months.

For the first quarter of 2011, the company swung to a net income of $342 million, or 78 cents per share, as compared to a net loss of $162 million, or 38 cents per share, in the year-ago quarter. Net sales surged to $6.4 billion from $5.8 billion earlier, mainly led by strong performance in the company's global mill operations. In fact, the company's sales of corrugated box packaging soared significantly during the quarter. In early April, the company acquired a majority stake in India's largest paper producer -- Andhra Paper Mills.

Looking ahead, the company believes that the focus on improving its distribution business would improve its earnings by $140 million annually. Thereby, to achieve the target, International Paper plans to incur net cash costs of $100 million over the next three years for greater cost of capital return. Meanwhile, the company expects the additional cost of $50 million incurred in the second quarter would reduce earnings per share by 11 cents. However, it forecasts a strong second quarter with robust cash flow and earnings.

3. Domtar ( UFS), is an integrated manufacturer and marketer of uncoated free sheet paper in North America. The company's uncoated free sheet papers and coated ground wood papers are used for business, commercial printing and publishing, and converting and specialty applications. Besides, the company also produces lumber and other specialty and industrial wood products. Domtar own Domtar Distribution Group -- a network of paper distribution facilities.

Of the 15 analysts covering the stock, 60% recommend a buy, while 20% rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 15.9% to $109.3 in the upcoming 12 months.

For the first quarter of 2011, the company recorded adjusted net income of $138 million, or $3.25 per share, as compared to consensus estimates of $2.34 polled by Bloomberg and $69 million, or $1.59 per share, in the year-ago quarter. Additionally, the company revealed that its net cash flow was up $29 million quarter-over-quarter totaling $240 million at the end of March. For the same period, Domtar's debt reduced by $72 million.

In its efforts to turn towards renewable resources for its energy requirements, the company said it will bear additional costs for its share in the proposed biomass plant in Rothschild that would produce both electricity and steam. The $250 million plant will produce 50 megawatts of electricity as well as steam for the company's papermaking operations. Domtar said it would raise its share of the cost by 88% to $47 million.

Looking ahead to 2011, Domtar expects to benefit from the higher prices for softwood pulp and for commercial printing and converting papers. For the first quarter 2011, the company has upped its dividend by 40% to 35 cents per share. Meanwhile, the board has authorized to increase the share buyback program from $150 million to $600 million.

2. Sonoco Products ( SON), a manufacturer of industrial and consumer packaging products along with packaging services, has operations in 312 locations across 35 countries. The company's operates in four segments: consumer packaging, tubes and cores/paper, packaging services, and All Other Sonoco. Its end markets are consumer and industrial.

Of the 11 analysts covering the stock, 64% rated a buy while the remaining advised a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain an average 15.7% to $39.8 in the upcoming 12 months.

For the first quarter of 2011, the company recorded its strongest ever quarter with earnings per share increasing 17% to 56 cents from the year-ago quarter. Net sales during the quarter amounted to $1.1 billion as compared to $935.1 million in the earlier quarter, led by volume growth, higher selling prices realized majorly from the tubes and cores/paper segment. Additionally, the company's acquisition of Associated Packaging Technologies (APT) in 2010 improved sales remarkably.

Looking ahead, the company estimates earnings per share to range between 61 to 65 cents per diluted share. For full year 2011, Sonoco forecasts earnings per diluted share between $2.52 and $2.60. Furthermore, the company expects stronger productivity in the tubes and cores/paper segment due to reducing operating downtime in their mill system and an improving price/cost relationship.

1. P.H. Glatfelter Company ( GLT), a manufacturer of specialty papers and fiber-based engineered products, engages in the production of papers for carbonless and forms, specialized envelopes, filtration papers for the tea and coffee industry, high-quality paper for book publishing, and paper for a variety of other specialty products. The company has two business units: the North America-based specialty papers and the Europe-based composite fibers.

The stock received has 50% buy ratings. Analysts polled by Bloomberg expect the stock to gain an average 30.9% to $18.0 in the upcoming 12 months.

For the first quarter of 2011, the company recorded adjusted earnings of $16 million, or 34 cents per diluted share, as compared to $8.7 million, or 19 cents per diluted share, in the year-ago period. Net sales increased by a record 17.6% to $396.8 million from the earlier year quarter, spurred by higher selling prices, and sales contributed by the Advanced Airlaid Materials business unit -- created after the acquisition of Concert Industries in Feb. 2010. On a sequential quarter basis, overall shipments increased by almost 9%.

Heading into the second quarter of 2011, the company estimates overall shipment volumes, selling prices and input costs to be higher than the first quarter. It expects to benefit from the initiatives to reduce costs and improve operations. Additionally, the company's board of directors authorized a share repurchase up to $50 million of outstanding common stock, which it intends to conduct in the upcoming 12 months. Capital expenditure for the full year is seen ranging between $60 and $65 million.

>>To see these stocks in action, visit the 6 Paper Stocks With Upside portfolio on Stockpickr.

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