As global markets grapple with economic uncertainties, the European stock indices have not been immune to volatility, with the pan-European STOXX Europe 600 Index ending 3.52% lower recently. Despite these challenges, opportunities still exist within specific sectors and regions, particularly in Sweden's small-cap market. In this environment, identifying stocks that exhibit strong fundamentals and growth potential can be crucial for investors looking to navigate market turbulence effectively. Here are three undiscovered Swedish gems that warrant closer attention.
Top 10 Undiscovered Gems With Strong Fundamentals In Sweden
Overview: Hoist Finance AB (publ) is a credit market company that focuses on loan acquisition and management operations across Europe, with a market cap of approximately SEK6.99 billion.
Operations: Hoist Finance generates revenue primarily from its secured (SEK 821 million) and unsecured (SEK 2.86 billion) loan portfolios, along with group items contributing SEK 255 million. The company's net profit margin is a key financial metric to consider for evaluating profitability.
Hoist Finance, a notable player in Sweden's financial sector, has seen its debt to equity ratio drop from 136.1% to 98.7% over five years. With earnings surging by 210.8% last year, it outperformed the Consumer Finance industry’s -2.1%. The company repurchased SEK 100 million worth of shares recently and reported Q2 net income of SEK 274 million, up from SEK 161 million a year ago. Trading at just below fair value, Hoist offers high-quality earnings and promising growth prospects.
Overview: Momentum Group AB (publ) supplies industrial components, industrial services, and related services to the industrial sector and has a market cap of SEK8.93 billion.
Operations: Momentum Group AB (publ) generates revenue primarily from industrial components and services, with a reported total of SEK2.68 billion after adjustments.
Momentum Group has shown robust performance, with earnings growth of 13.3% over the past year, surpassing the Trade Distributors industry average of 1.3%. The company reported Q2 sales of SEK 773 million and net income of SEK 53 million, compared to SEK 549 million and SEK 44 million respectively a year ago. Trading at a significant discount to its estimated fair value, Momentum's debt-to-equity ratio has improved from 88.9% to 66.8% over five years while maintaining high-quality earnings and positive free cash flow.
Overview: TF Bank AB (publ) is a digital bank offering consumer banking services and e-commerce solutions through its proprietary IT platform, with a market cap of SEK5.68 billion.
Operations: TF Bank generates revenue primarily from three segments: Credit Cards (SEK 511.24 million), Consumer Lending (SEK 607.24 million), and E-commerce Solutions excluding Credit Cards (SEK 363.28 million).
TF Bank, with total assets of SEK24.1B and total equity at SEK2.4B, has been making strides despite some challenges. The bank's earnings grew by 21.3% over the past year, outpacing the industry average of 10.4%. Total deposits stand at SEK20.7B against loans of SEK19.4B, indicating robust customer trust and low-risk funding sources (95%). However, a high level of bad loans (10.6%) and a low allowance for these loans (62%) are areas to watch closely as they restructure their business with Rediem Capital AB focusing on non-performing exposures starting January 2025.
Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.
Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include OM:HOFI OM:MMGR B and OM:TFBANK.
