Discover These 3 Undiscovered Gems in Sweden with Strong Fundamentals

As global markets react to the recent Fed rate cut, small-cap stocks have shown notable resilience, with indices like the Russell 2000 outperforming their larger counterparts. This environment of lower interest rates can be particularly beneficial for small-cap companies that often rely more heavily on borrowing. In this context, identifying stocks with strong fundamentals becomes crucial. Here are three undiscovered gems in Sweden that exhibit robust financial health and growth potential.

Top 10 Undiscovered Gems With Strong Fundamentals In Sweden

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Softronic	NA	3.58%	7.41%	★★★★★★
Bahnhof	NA	9.02%	15.02%	★★★★★★
Duni	29.33%	10.78%	22.98%	★★★★★★
Firefly	NA	16.04%	32.29%	★★★★★★
AB Traction	NA	5.38%	5.19%	★★★★★★
Creades	NA	-28.54%	-27.09%	★★★★★★
Svolder	NA	-22.68%	-24.17%	★★★★★★
Byggmästare Anders J Ahlström Holding	NA	30.31%	-9.00%	★★★★★★
Linc	NA	56.01%	0.54%	★★★★★★
Solid Försäkringsaktiebolag	NA	7.64%	28.44%	★★★★☆☆

Click here to see the full list of 57 stocks from our Swedish Undiscovered Gems With Strong Fundamentals screener.

Let's review some notable picks from our screened stocks.

AQ Group (OM:AQ)

Simply Wall St Value Rating: ★★★★★★

Overview: AQ Group AB (publ) manufactures and sells components and systems for industrial customers in Sweden, other European countries, and internationally, with a market cap of SEK11.74 billion.

Operations: AQ Group AB (publ) generates revenue primarily from its Component segment, which accounts for SEK7.87 billion, and its System segment, contributing SEK1.78 billion. The company has a market cap of SEK11.74 billion.

AQ Group, a small cap in Sweden's electrical industry, has seen earnings growth of 19.3% over the past year, outpacing the industry's 0.6%. The company trades at 87.6% below its estimated fair value and has reduced its debt to equity ratio from 36.3% to 7.3% over five years. Recent additions to the S&P Global BMI Index and a net income rise from SEK 170 million to SEK 180 million highlight its potential for investors seeking undervalued opportunities in this sector.

• Click to explore a detailed breakdown of our findings in AQ Group's health report.

• Understand AQ Group's track record by examining our Past report.

Creades (OM:CRED A)

Simply Wall St Value Rating: ★★★★★★

Overview: Creades AB is a private equity and venture capital investment firm that focuses on early to late-stage ventures, emerging growth, middle market, growth capital, and buyout investments with a market cap of SEK10.43 billion.

Operations: Creades AB generates revenue primarily from its investments in online retailers, amounting to SEK1.11 billion.

Creades has shown notable performance with earnings growth of 129.4% in the past year, surpassing the Diversified Financial industry’s 80.2%. The company is debt-free and boasts a price-to-earnings ratio of 9.5x, which is below the Swedish market average of 23.5x. Recent results highlight revenue at SEK833 million for Q2 2024, compared to negative SEK353 million last year; net income reached SEK771 million from a loss of SEK299 million previously.

• Take a closer look at Creades' potential here in our health report.

• Learn about Creades' historical performance.

ITAB Shop Concept (OM:ITAB)

Simply Wall St Value Rating: ★★★★★★

Overview: ITAB Shop Concept AB (publ) specializes in designing and providing customized shop fittings, checkouts, consumer flow solutions, professional lighting systems, and digitally interactive solutions for physical stores, with a market cap of approximately SEK6.43 billion.

Operations: Revenue from ITAB Shop Concept AB (publ) primarily comes from its Furniture & Fixtures segment, amounting to SEK6.39 billion.

ITAB Shop Concept has shown significant improvement in its financial health, reducing its debt to equity ratio from 137.6% to 20% over the past five years. The company reported earnings growth of 56.7% last year, outpacing the Commercial Services industry’s performance. Trading at 8.9% below estimated fair value, ITAB's interest payments are well-covered by EBIT (21x). Recent contracts worth EUR 42 million highlight strong client trust and potential for future revenue expansion.

• Delve into the full analysis health report here for a deeper understanding of ITAB Shop Concept.

• Explore historical data to track ITAB Shop Concept's performance over time in our Past section.

Taking Advantage

• Click here to access our complete index of 57 Swedish Undiscovered Gems With Strong Fundamentals.
• Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks.
• Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.

Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

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.

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