Three European Growth Stocks Poised to Outperform: Seizing Discounts in a Volatile Market

In a year marked by geopolitical tensions and shifting trade policies, European equities have faced significant headwinds. Yet within this turbulence, a select group of companies has emerged as compelling opportunities for investors willing to look beyond short-term volatility. Three firms—I.CO.P. S.p.A. Società Benefit (BIT:ICOP), Pexip Holding ASA (OB:PEXIP), and SmartCraft ASA (OB:SMCRT)—currently trade at steep discounts to their discounted cash flow (DCF) fair values, offering rare entry points for long-term growth.

The Case for Undervalued European Growth

Market volatility often obscures the intrinsic value of companies with strong fundamentals. A DCF analysis reveals that all three stocks are undervalued by 20.4% to 48.2%, suggesting robust upside potential. While near-term risks like U.S. trade restrictions and Middle East instability persist, these firms are positioned to capitalize on secular trends in construction technology, enterprise collaboration, and software innovation.

1. I.CO.P. S.p.A. Società Benefit (BIT:ICOP): A Heavy Construction Play with Explosive Growth Ahead

I.CO.P., an Italian construction firm specializing in heavy infrastructure, is currently trading at a 48.2% discount to its DCF-derived fair value of €24.15 (vs. its June 2025 price of €12.50). Despite a 5.9% revenue decline in 2024—likely due to macroeconomic headwinds—the firm's three-year revenue growth of 5.1% underscores its resilience. Analysts project earnings to surge at 28.78% annually over the next five years, far outpacing Italy's 7.4% GDP growth forecast.

Why Buy Now?
- Strategic Focus on High-Margin Projects: The company's shift toward specialized infrastructure (e.g., energy and transportation networks) positions it to benefit from Europe's green investment push.
- Safety Margin: Its 48.2% discount provides a cushion against near-term risks like delayed project timelines.

2. Pexip Holding ASA (OB:PEXIP): Cloud Collaboration's Undervalued Leader

Pexip, a Norwegian provider of secure video collaboration tools, trades at a 20.4% discount to its DCF fair value of NOK77.42 (vs. its June 2025 price of NOK61.6). Despite a challenging 2024—marked by enterprise budget cuts—the firm's NOK1.17 billion in revenue highlights its dominance in regulated sectors like healthcare and government. Analysts expect earnings to grow at 23.7% annually over five years, easily outpacing Norway's 8.3% economic growth rate.

Growth Catalysts:
- Strategic Moves: A share repurchase program and partnerships with tech giants like Google (enhancing interoperability with Teams, Zoom, and Meet) are driving adoption.
- Margin Resilience: While margins dipped slightly in 2024, the company's cloud-first model ensures scalability.

3. SmartCraft ASA (OB:SMCRT): Software Innovation in Construction

SmartCraft, a Nordic software firm serving the construction sector, offers a 26.8% discount to its DCF fair value of NOK36.36 (vs. its June 2025 price of NOK26.6). Despite a slight decline in profit margins due to R&D investments, the company's NOK4.41 billion market cap reflects its leadership in tools like SmartCraft Spark and Congrid's BIM features. Analysts forecast 27.3% annual earnings growth over five years, well above Norway's 8.3% GDP growth.

Key Drivers:
- Product Innovation: New software modules targeting electrical design and project management are boosting client retention.
- Geographic Expansion: Its footprint now spans the UK, Sweden, and Finland, diversifying revenue streams.

Risks and Investment Strategy

While these stocks offer compelling valuations, investors should acknowledge risks:
- I.CO.P.: Reliance on government contracts in volatile markets.
- Pexip: Cybersecurity threats to its cloud infrastructure.
- SmartCraft: Competition from global software giants.

Actionable Advice:
- Dollar-Cost Average: Mitigate volatility by spreading purchases over three to six months.
- Hold for the Long Term: These firms' DCF discounts and growth trajectories suggest multiyear upside.

Conclusion: Value Meets Growth in Europe's Undervalued Gems

In a market defined by uncertainty, I.CO.P., Pexip, and SmartCraft stand out as rare opportunities to pair discounted valuations with high-growth profiles. Their DCF discounts act as a safety net, while their strategic initiatives—ranging from infrastructure specialization to cloud innovation—position them to thrive as European economies stabilize. For investors with a 3–5 year horizon, these stocks could be among the best-performing plays in 2025 and beyond.