As European inflation nears the central bank's target and key indices like the STOXX Europe 600 Index reach record highs, investors are increasingly looking towards smaller markets for potential opportunities. Amidst this backdrop, Sweden's market offers intriguing possibilities for those willing to explore beyond the usual suspects. In light of these evolving economic conditions, identifying a good stock often involves looking at companies with strong fundamentals and growth potential that can thrive even as broader market sentiments shift.
Top 10 Undiscovered Gems With Strong Fundamentals In Sweden
Overview: Bergman & Beving AB (publ) offers solutions for the manufacturing and construction sectors in Sweden, Norway, Finland, and internationally with a market cap of SEK8.67 billion.
Operations: Bergman & Beving generates revenue primarily from three segments: Core Solutions (SEK1.41 billion), Safety Technology (SEK1.62 billion), and Industrial Equipment (SEK1.76 billion). The company has a market cap of SEK8.67 billion.
Bergman & Beving, a smaller player in the trade distributors industry, has shown mixed performance. Recent earnings reported SEK 52 million net income for Q1 2024, up from SEK 45 million last year. The company approved a dividend of SEK 3.80 per share at its recent AGM. Despite high debt levels with a net debt to equity ratio of 42.6%, interest payments are well covered by EBIT at four times coverage. Trading at nearly 27% below estimated fair value suggests potential upside for investors seeking undervalued opportunities in Sweden's market.
Overview: engcon AB (publ) designs, produces, and sells excavator tools globally with a market cap of SEK17.85 billion.
Operations: The company generates revenue primarily from the sale of construction machinery and equipment, amounting to SEK1.54 billion. The net profit margin is a key financial metric for assessing profitability.
Engcon, a small cap in the machinery sector, saw earnings drop by 60.6% over the past year, contrasting with the industry average of 0.9%. Despite this, its interest payments are well covered by EBIT at 20.4x coverage and it remains free cash flow positive. However, profit margins decreased to 9.9% from last year's 18%. The company has a satisfactory net debt to equity ratio of 8.5%, positioning it for potential future growth with forecasted earnings expected to rise by nearly 44% annually.
Overview: ITAB Shop Concept AB (publ) specializes in providing solution design, customized shop fittings, checkouts, consumer flow solutions, professional lighting systems, and digitally interactive solutions for physical stores with a market cap of SEK5.46 billion.
Operations: ITAB Shop Concept AB (publ) generates revenue primarily from solution design, customized shop fittings, checkouts, consumer flow solutions, professional lighting systems, and digitally interactive solutions. The company reported a market cap of SEK5.46 billion.
ITAB Shop Concept's net debt to equity ratio stands at a satisfactory 8.8%, reflecting strong financial health. Over the past five years, the company has reduced its debt to equity ratio from 137.6% to 20%. Additionally, ITAB's interest payments are well covered by EBIT with a coverage of 21x. Recent earnings showed significant growth, with Q2 sales reaching SEK 1,685 million and net income at SEK 95 million, up from SEK 56 million last year.
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:BERG B OM:ENGCON B and OM:ITAB.
