The Swedish stock market has been experiencing notable movements, with the pan-European STOXX Europe 600 Index rising by 1.85% recently, buoyed by an interest rate cut from the European Central Bank. This favorable economic climate provides a fertile ground for discovering promising small-cap stocks that may offer unique opportunities for investors. When considering which stocks to add to your portfolio, it is crucial to look for companies that exhibit strong fundamentals and are well-positioned to capitalize on current market conditions. In this article, we will explore three undiscovered gems in Sweden that could be valuable additions to your investment strategy.

Top 10 Undiscovered Gems With Strong Fundamentals In Sweden

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

Below we spotlight a couple of our favorites from our exclusive screener.

Clas Ohlson

Simply Wall St Value Rating: ★★★★★★

Overview: Clas Ohlson AB (publ) is a retail company that sells hardware, electrical, multimedia, home, and leisure products in Sweden, Norway, Finland, and internationally with a market cap of SEK10.24 billion.

Operations: Clas Ohlson AB (publ) generates revenue primarily from its Retail - Specialty segment, which amounted to SEK10.66 billion. The company's net profit margin is a key financial metric to consider when evaluating its profitability.

Clas Ohlson, a Swedish retailer, has shown impressive performance recently. Earnings surged by 281.8% over the past year, outpacing the Specialty Retail industry’s 21%. The company is debt-free and trading at 66.6% below its estimated fair value, making it an attractive option compared to peers. Recent earnings for Q1 FY2024 reported sales of SEK 2.62 billion and net income of SEK 145.8 million, reflecting substantial growth from a net loss last year.

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

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

Ratos

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 approximately SEK11.44 billion.

Operations: Ratos generates revenue primarily from three segments: Consumer (SEK5.65 billion), Industry (SEK10.47 billion), and Construction & Services (SEK16.77 billion). The company has a market cap of SEK11.44 billion.

Ratos has shown notable earnings growth of 34.1% annually over the past five years, and its net debt to equity ratio has improved from 56.6% to 33%. The firm reported a SEK953 million one-off gain impacting recent financials, with a satisfactory net debt to equity ratio of 20.8%. Recent earnings for Q2 saw sales at SEK9.11 billion compared to SEK10 billion last year, while net income increased slightly from SEK586 million to SEK608 million.

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

• Assess Ratos' past performance with our detailed historical performance reports.

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 SEK11.24 billion.

Operations: Rusta AB (publ) generates revenue primarily from Sweden (SEK6.43 billion), followed by Norway (SEK2.39 billion) and other markets (SEK2.41 billion).

Rusta, a notable player in the Swedish retail market, has shown impressive earnings growth of 47.5% over the past year, outpacing its industry. With interest payments well-covered by EBIT (3.5x), and trading at 71% below estimated fair value, it presents a compelling investment case. Recent earnings reports reveal sales of SEK 3.07 billion and net income of SEK 231 million for Q1 2024. Additionally, Rusta continues its expansion with new store openings in Norway and Sweden this fall.

• Click here and access our complete health analysis report to understand the dynamics of Rusta.

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

Seize The Opportunity

• Access the full spectrum of 57 Swedish Undiscovered Gems With Strong Fundamentals by clicking on this link.
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Searching for a Fresh Perspective?

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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:CLAS B OM:RATO B and OM:RUSTA.

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