Undiscovered Gems in Sweden Worth Exploring October 2024

In the ever-evolving landscape of global investing, Sweden's small-cap sector has emerged as an attractive destination for investors seeking undervalued opportunities. As the Riksbank's recent rate cuts and China's robust stimulus measures spark renewed interest, investors are turning their attention to lesser-known Swedish stocks with strong fundamentals. This article explores three such "undiscovered gems" that could be worth exploring in October 2024.


1. Creades (OM:CRED A)

Creades AB, a private equity and venture capital investment firm, has demonstrated impressive growth in recent years. With a market capitalization of SEK11.30 billion, Creades generates revenue primarily from its investments in online retailers. The company's earnings surged by 129% over the past year, outpacing the industry average of 80%. Creades' debt-free status and notable turnaround in recent results, with Q2 revenue reaching SEK 833 million and net income at SEK 771 million, make it an attractive prospect for investors.


2. ITAB Shop Concept (OM:ITAB)

ITAB Shop Concept AB (publ), a provider of solution design, customized shop fittings, and professional lighting systems, has a market cap of approximately SEK6.95 billion. The company's earnings grew by 56.7% over the past year, outpacing industry standards. Trading at 11.9% below its estimated fair value and boasting a satisfactory net debt to equity ratio of 8.8%, ITAB seems financially robust. Recent deals, including a EUR 20 million shop-in-shop framework agreement across Europe and another EUR 22 million contract in the UK, highlight its expanding market presence and strategic partnerships in retail solutions.


3. Rusta (OM:RUSTA)

Rusta AB (publ), a retailer of home and leisure products operating in Sweden, Norway, Finland, and Germany, has a market cap of SEK11.84 billion. Rusta's earnings grew by 47.5% over the past year, significantly outpacing the Multiline Retail industry's -5%. The company trades at 70.5% below its estimated fair value, suggesting potential for appreciation. Rusta has opened new stores in Sweden and Norway, expanding its footprint to 217 locations as part of a robust growth strategy. Recent financials show sales of SEK 3 billion and net income of SEK 231 million for Q1, with dividends set at SEK 1.15 per share.


In conclusion, Sweden's small-cap sector offers investors a wealth of undervalued opportunities. By focusing on companies with strong fundamentals, such as Creades, ITAB Shop Concept, and Rusta, investors can capitalize on favorable monetary policies and shifting market dynamics. As the global markets continue to react to China's robust stimulus measures and European hopes for interest rate cuts, these "undiscovered gems" may prove to be valuable additions to an investment portfolio.