Selection of Swedish value stocks for July 2024

As global markets navigate economic recovery and uncertainty to varying degrees, the Swedish equity market offers unique opportunities for value-oriented investors. Given the current economic changes and market conditions, identifying undervalued stocks requires a deep understanding of both sectoral performance and broader economic indicators.

The 10 most undervalued stocks in Sweden based on cash flow

Click here to see the full list of 44 stocks from our Undervalued Swedish Stocks Based on Cash Flows screener.

Let’s dive into some of the best options from the screener

Overview: CTT Systems AB, based in Sweden, specializes in the development, manufacture and worldwide sale of humidity control systems for aircraft and has a market capitalization of approximately SEK 3.92 billion.

Operations: The company generates its sales mainly in the aerospace and defense industry and amounts to SEK 314.20 million.

Estimated discount to fair value: 29.0%

CTT Systems is significantly undervalued at SEK 313 according to DCF metrics and has an estimated fair value of SEK 441.12. Despite its unstable dividend history, the company has strong growth prospects. Earnings are expected to grow by 21.58% and sales by 20.3% per year, significantly outperforming the Swedish market. Recent events underline CTT’s strengthening market position, including confirmed selections by airlines for its humidification systems in the upcoming A350 and Boeing 777X batches from 2025.

Overview: Husqvarna AB (publ) specializes in the manufacture and distribution of garden tools, irrigation products and lawn care equipment and has a market capitalization of SEK 49.89 billion.

Operations: The company generates sales in several key segments, including Gardena with SEK 13.06 billion, Husqvarna Construction with SEK 8.23 ​​billion and Husqvarna Forest & Garden with SEK 29.38 billion.

Estimated discount to fair value: 38.7%

Trading at SEK 87.36, Husqvarna is considered undervalued with a fair value of SEK 142.63 according to DCF analysis, suggesting a significant discount. Recent earnings show a decline from SEK 17.17 billion to SEK 14.72 billion year-on-year, with net profit also declining, reflecting challenges despite strong brand strengthening measures such as the partnership with Liverpool FC aimed at increasing global visibility. However, Husqvarna’s earnings are expected to grow significantly by around 24.7% annually over the next three years, outperforming the Swedish market’s growth forecast of 14.4%.

Overview: Sweco AB (publ) provides architectural and engineering consulting services worldwide and has a market capitalization of approximately SEK 53.33 billion.

Operations: Sweco’s sales are distributed across different regions: Sweden generates SEK 8.52 billion, Norway SEK 3.39 billion, Belgium SEK 3.92 billion, Denmark SEK 2.98 billion, Finland SEK 3.67 billion, the Netherlands SEK 2.89 billion and Germany and Central Europe contribute SEK 2.62 billion.

Estimated discount to fair value: 31.9%

Sweco is considered undervalued at SEK 148.5 on a DCF basis, as the intrinsic value is SEK 218.08, suggesting a significant margin of safety. Although the dividend history is inconsistent, Sweco is expected to grow earnings by 16.41% per year, outpacing the average growth rate of the Swedish market. Recent strategic partnerships for green hydrogen projects with Helen and VoltH2 underline the company’s commitment to expanding into sustainable energy sectors and could boost future revenue streams despite a slight year-on-year decline in first-quarter profit from SEK 625 million to SEK 558 million.

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This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They are not a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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