Undervalued European Stocks in December 2025: Attractive Value Opportunities for Long-Term Investors

The European market has long been a treasure trove for value hunters, and December 2025 is no exception. With macroeconomic headwinds easing and central banks signaling a pivot toward accommodative policies, the stage is set for undervalued stocks to shine. Three names-Truecaller (OM:TRUE B), Sanoma Oyj (HLSE:SANOMA), and Peab (OM:PEAB B)-stand out as compelling opportunities for long-term investors willing to look beyond short-term volatility. Let's dive into the numbers and narratives that make these stocks worth a closer look.

Sanoma Oyj: A Sleeping Giant in Education and Media

Sanoma Oyj (HEL:SANOMA) is trading at a staggering 44% discount to its intrinsic value of €19.34, as calculated by a discounted cash flow (DCF) model according to analysis. Even more compelling is the fact that its price-to-earnings (P/E) ratio of 10.88x is far below the European media sector average, suggesting the market is underestimating its long-term potential. Analysts have upgraded their outlook to "Buy," citing Sanoma's updated financial targets: high single-digit growth in adjusted operating profit from 2026 to 2030, driven by curriculum renewals in Poland and Spain and AI-driven personalization in K12 education.

The Learning segment, which accounts for a significant portion of Sanoma's revenue, is poised to benefit from digital transformation and strategic M&A. Meanwhile, the Media Finland segment could see a tailwind from the opening of the gambling advertising market in 2027, a move expected to boost low single-digit earnings growth. Recent Q3 results underscore this optimism: operational EBIT hit €172 million, free cash flow improved to €86 million, and leverage dropped to 2.0x. While Sanoma's current return on equity (ROE) of 2.8% lags the industry average, analysts project a jump to 22% over the next three years as profitability normalizes.

Risks to Consider: Sanoma's exposure to advertising markets and its recent impairments (€48 million from exiting the Dutch distribution market) highlight the need for patience. However, these challenges are being offset by cost-cutting and efficiency gains.

Peab: Building a Brighter Future in Construction

Peab (OM:PEAB B) is a Swedish construction and infrastructure giant trading at a 43% discount to its DCF-derived fair value of SEK 148.74 according to valuation analysis. With a P/E ratio of 14.6x, it's not just undervalued-it's trading at a conservative multiple relative to its peers and the European construction industry average of 15.2x according to market data. Analysts forecast 21.64% annual earnings growth, a rate that dwarfs the Swedish market average.

Peab's recent contract wins are a testament to its growth potential. The company secured a SEK 177 million retirement home project in Falun and a SEK 113 million fossil-free infrastructure project in Stockholm's Meatpacking District according to news reports. These projects align with the global shift toward sustainable development and position Peab to capitalize on green infrastructure spending. Additionally, its three-year total shareholder return of 56.31% and a 6.76% share price surge in the past month suggest improving investor sentiment.

Risks to Consider: Construction is a cyclical business, and Peab's exposure to public spending means political shifts or project delays could dampen earnings. Its interest coverage ratio also warrants scrutiny, as rising borrowing costs could pressure margins.

Truecaller: A Tech Play with a Twist

Truecaller (OM:TRUE B) is arguably the most speculative of the three but also the most intriguing. Trading at SEK 18.58, it's undervalued by 49.1% relative to its DCF fair value of SEK 36.47 according to market analysis. Its P/E ratio of 13.6x is a fraction of its peer average of 71.1x and the Swedish software industry average of 27.9x according to valuation data, hinting at a market that's not fully pricing in its long-term potential. Analysts have set a 12-month target price of SEK 39.17-a 105% upside-though confidence in this consensus remains low.

Truecaller's recent struggles-a 22% drop in advertising revenue due to algorithm changes by a key partner and weak ad markets in India-are temporary. The company is pivoting to reduce dependency on volatile revenue streams, with subscription and business revenue growing 29% and 17%, respectively, in the latest quarter according to corporate reports. Strategic product launches, such as the Family Protection feature, and iOS 18 updates that enhance functionality for iPhone users, could reignite growth.

Risks to Consider: Truecaller's reliance on a few key markets and partners remains a vulnerability. Execution risks around diversification and monetization of new features could delay recovery.

The Strategic Case for These Stocks

The common thread among these three companies is a significant discount to intrinsic value, supported by robust earnings growth potential. Sanoma's educational and media segments are positioned for structural growth, Peab's construction projects align with global sustainability trends, and Truecaller's pivot to recurring revenue models could unlock long-term value.

For long-term investors, the key is to focus on the fundamentals:
- Sanoma offers a compelling risk-rebalance story with improving margins and a clear path to earnings acceleration.
- Peab combines undervaluation with a strong order book and alignment with green infrastructure megatrends.
- Truecaller is a high-conviction play on a tech company navigating short-term headwinds while building a more diversified revenue base.

As always, patience is key. These stocks may take time to re-rate, but the margin of safety provided by their current valuations makes them attractive in a recovering European market.