Three Undiscovered Gems in Sweden with Strong Potential

As global markets navigate a period of economic adjustments and rate cuts, the European Central Bank's recent move to lower interest rates has injected a fresh wave of optimism into the region's equities. Amidst this backdrop, Sweden's market presents unique opportunities for discerning investors seeking growth potential in lesser-known stocks. In such dynamic environments, identifying stocks with strong fundamentals and growth prospects becomes crucial. Here are three undiscovered gems in Sweden that exhibit promising potential amidst these evolving market conditions.

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%	★★★★★★
AB Traction	NA	5.38%	5.19%	★★★★★★
Firefly	NA	16.04%	32.29%	★★★★★★
AQ Group	7.30%	14.89%	22.26%	★★★★★★
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 58 stocks from our Swedish Undiscovered Gems With Strong Fundamentals screener.

We'll examine a selection from our screener results.

Linc (OM:LINC)

Simply Wall St Value Rating: ★★★★★★

Overview: Linc AB is a private equity and venture capital firm specializing in early and mature stage investments in pharmaceutical, life-science, and med-tech companies, with a market cap of SEK5.32 billion.

Operations: Linc AB generates revenue primarily from its listed holdings, which contributed SEK1.56 billion, while unlisted holdings showed a minor negative impact of SEK0.79 million.

Linc AB, a debt-free entity, reported impressive earnings growth of 610% over the past year, significantly outpacing the Capital Markets industry. The company’s recent financials show revenue of SEK 1.04 billion for Q2 2024 compared to negative revenue of SEK 137.44 million a year ago, with net income reaching SEK 1.04 billion from a net loss of SEK 111.79 million previously. With a P/E ratio of just 3.4x against the Swedish market's average of 23.4x and high-quality non-cash earnings, Linc appears undervalued and well-positioned for continued profitability despite not being free cash flow positive yet.

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

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

Ratos (OM:RATO B)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Ratos AB (publ) is a private equity firm specializing in buyouts, turnarounds, add-on acquisitions, and middle market transactions with a market cap of SEK11.43 billion.

Operations: Ratos generates revenue primarily from three segments: Consumer (SEK5.65 billion), Industry (SEK10.47 billion), and Construction & Services (SEK16.77 billion).

Ratos, a notable player in Sweden's investment landscape, has shown impressive financial health. Over the past five years, earnings have surged by 34.1% annually, while its debt-to-equity ratio improved from 56.6% to 33%. The company reported a significant one-off gain of SEK953M in the last year and is trading at nearly 29% below its estimated fair value. Recent contracts worth SEK1.1 billion highlight Ratos' strategic growth initiatives in Stockholm and Gothenburg regions.

• Dive into the specifics of Ratos here with our thorough health report.

• Examine Ratos' past performance report to understand how it has performed in the past.

Rusta (OM:RUSTA)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Rusta AB (publ) retails home and leisure products in Sweden, Norway, Finland, and Germany with a market cap of SEK11.27 billion.

Operations: Rusta AB (publ) generates revenue primarily from retailing home and leisure products across Sweden, Norway, Finland, and Germany. The company has a market cap of SEK11.27 billion.

Rusta's earnings surged 47.3% last year, outpacing the Multiline Retail industry, which saw a -5% change. The company reported Q1 sales of SEK 3.07 billion and net income of SEK 231 million, up from SEK 189 million the previous year. Basic earnings per share rose to SEK 1.5 from SEK 1.2 a year ago. Rusta's debt is well-covered by EBIT at a ratio of 3.4x, and it trades at nearly 71% below its estimated fair value.

• Navigate through the intricacies of Rusta with our comprehensive health report here.

• Gain insights into Rusta's historical performance by reviewing our past performance report.

Seize The Opportunity

• Dive into all 58 of the Swedish Undiscovered Gems With Strong Fundamentals we have identified here.
• 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.
• 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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