Exploring engcon And Two More Hidden Small Caps In Sweden

As global markets experience shifts, with a notable rotation towards small-cap and value shares in the U.S., Sweden's market also presents unique opportunities for investors looking to diversify their portfolios. Amid these changing dynamics, exploring lesser-known small-cap stocks like engcon can offer potential growth avenues aligned with current investment trends focusing on value-oriented sectors. In this context, a good stock typically exhibits solid fundamentals, a strong business model, and the potential to benefit from current economic conditions. Stocks like engcon that operate within niche markets or possess innovative technologies might be particularly poised for appreciation in an environment where investors are increasingly looking at value and small-cap investments.

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	9.47%	15.07%	★★★★★★
Duni	29.33%	10.78%	22.98%	★★★★★★
AB Traction	NA	5.38%	5.19%	★★★★★★
Firefly	NA	15.31%	29.94%	★★★★★★
Creades	NA	-28.54%	-27.09%	★★★★★★
Linc	NA	56.01%	0.54%	★★★★★★
Rederiaktiebolaget Gotland	NA	-14.29%	18.06%	★★★★★★
Karnell Group	44.29%	22.04%	39.45%	★★★★★☆
Solid Försäkringsaktiebolag	NA	7.64%	28.44%	★★★★☆☆

Click here to see the full list of 54 stocks from our Swedish Undiscovered Gems With Strong Fundamentals screener.

Let's uncover some gems from our specialized screener.

engcon (OM:ENGCON B)

Simply Wall St Value Rating: ★★★★★☆

Overview: Engcon AB (publ) specializes in the design, production, and sale of excavator tools across a broad international market including Europe, North and South America, and Asia-Pacific regions, with a market capitalization of SEK 15.76 billion.

Operations: The company generates revenue primarily through the sale of construction machinery and equipment, with a notable increase in gross profit from SEK 447 million in 2019 to SEK 968 million by the first quarter of 2023. It manages significant operating expenses which include sales & marketing and research & development costs, contributing to a net income margin that has seen fluctuations, most recently recorded at approximately 17.98% as of mid-2023.

Engcon, a notable player in the machinery sector, reported a challenging fiscal period with sales dropping to SEK 844 million from SEK 1.2 billion year-over-year and net income falling to SEK 102 million from SEK 224 million. Despite these hurdles, the company's debt management remains robust with a satisfactory net debt to equity ratio of 8.5%. Looking ahead, Engcon is poised for recovery with earnings expected to grow by 44% annually, supported by strong EBIT coverage of interest payments at 20.4 times, signaling financial stability amidst expansion efforts marked by strategic executive enhancements aimed at bolstering operations for future growth.

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

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

Scandi Standard (OM:SCST)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Scandi Standard AB (publ) is a producer and seller of chilled, frozen, and ready-to-eat chicken products, operating across Sweden, Norway, Ireland, Denmark, Finland, Germany, the United Kingdom and other European countries with a market capitalization of SEK 5.11 billion.

Operations: The company generates its primary revenue from the Ready-To-Cook and Ready-To-Eat segments, contributing significantly to a total revenue of SEK 12.98 billion as of the latest report. It operates with a gross profit margin of 38.61%, reflecting its cost management in production processes despite varying operational costs over recent periods.

Scandi Standard, a lesser-discussed gem in Sweden's stock market, is trading at a significant 46% below its estimated fair value. The company recently secured a SEK 3.2 billion sustainability-linked bank loan, enhancing its financial flexibility for growth. Despite not outperforming the food industry's earnings growth last year, Scandi Standard has high-quality earnings and forecasts an annual profit increase of 20%. Additionally, it has successfully reduced its debt-to-equity ratio from 122% to 61% over five years.

• Delve into the full analysis health report here for a deeper understanding of Scandi Standard.

• Learn about Scandi Standard's historical performance.

TF Bank (OM:TFBANK)

Simply Wall St Value Rating: ★★★★☆☆

Overview: TF Bank AB (publ) is a digital bank that offers consumer banking services and e-commerce solutions via its proprietary IT platform, with a market capitalization of SEK 5.74 billion.

Operations: The company generates its revenue through three primary segments: credit cards, consumer lending, and ecommerce solutions excluding credit cards. It consistently achieves a gross profit margin of 100%, indicating that it operates without the cost of goods sold. The business model focuses on expanding these financial services while managing operating expenses which include sales & marketing and general & administrative costs to maintain profitability.

TF Bank, a lesser-known Swedish entity, is showing promising financial health with significant earnings growth of 21.3% over the past year, outpacing the industry average of 10.4%. Currently trading at 48.6% below its estimated fair value, it offers potential upside for investors. Despite challenges like a high bad loans ratio at 10.6%, TF Bank maintains a low allowance for bad loans at 62%, signaling areas needing attention in risk management. With total assets of SEK24.1B and robust deposit and loan portfolios, the bank's foundational stability is evident, supported by primarily low-risk funding sources constituting 95% of liabilities.

• Click here to discover the nuances of TF Bank with our detailed analytical health report.

• Review our historical performance report to gain insights into TF Bank's's past performance.

Key Takeaways

• Access the full spectrum of 54 Swedish Undiscovered Gems With Strong Fundamentals by clicking on this link.
• Are any of these part of your asset mix? Tap into the analytical power of Simply Wall St's portfolio to get a 360-degree view on how they're shaping up.
• Invest smarter with the free Simply Wall St app providing detailed insights into every stock market around the globe.

Ready To Venture Into Other Investment Styles?

• 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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