Swedish stocks: rare quality, almost never on sale
2026-10-14 · By Lubin Danilo, founder of Lubin Investment
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Of 19 large Swedish stocks screened, ten show high quality: Alfa Laval, Addtech, Ericsson, Atlas Copco, Assa Abloy, Epiroc, Evolution, Lifco, Sandvik and Hexagon. But only one, Ericsson, trades below my buy price. Sweden sells quality, rarely at a discount, and that observation is information in itself.
Ten stocks at 7 out of 10 or more, one reasonable price
I screened 19 large Swedish stocks with the same grid I use for every country. On one side, a quality score out of 10 built from concrete financial criteria: profitability, sales and cash growth, share buybacks, debt. On the other, and separately, a buy price: the highest price I would pay to aim for a 15% annual return over five years. It is demanding on purpose, because it is meant to spot the rare cases where you do not have to pay for perfection. The figures are dated 14 October 2026. A few names (H&M, SKF, Nibe, SEB, Boliden) did not respond to the data pull that day and are not in the sample.
The result: ten companies score 7 out of 10 or more. The table ranks them by score and compares today's price with my buy price, in Swedish kronor.
| Company | Score | Price (SEK) | Buy price (SEK) | Price versus buy price |
|---|---|---|---|---|
| Alfa Laval | 9 | 593 | 223 | 166% above |
| Addtech | 9 | 326 | 190 | 72% above |
| Ericsson | 9 | 94 | 108 | 13% below |
| Atlas Copco | 8 | 211 | 124 | 70% above |
| Assa Abloy | 8 | 353 | 136 | 160% above |
| Epiroc | 8 | 272 | 266 | 2% above |
| Evolution | 8 | 802 | 407 | 97% above |
| Lifco | 8 | 324 | 176 | 83% above |
| Sandvik | 7 | 369 | 206 | 79% above |
| Hexagon | 7 | 105 | 61 | 72% above |
Read the last column like a thermometer. Eight of these ten stocks trade between 70% and 166% above what I am willing to pay. That is not a verdict on the business, it is a verdict on the price: the market has already recognised Swedish quality, and paid for it in advance. I had already compared two of them, Addtech and Lifco, in my article on Swedish compounders; the table confirms both still sit above my buy price.
Why Swedish quality is almost always expensive
These companies share one trait: they sell equipment or components their customers cannot do without, then earn money a second time on spare parts, services and upgrades. Once a factory has installed compressors, heat exchangers or lock systems, it stays tied to its supplier for years. That is my reading of their businesses, not a screener figure. This recurrence makes cash predictable, and predictable cash is priced high: the market pays for peace of mind.
Alfa Laval is the clearest example. It scores 9 out of 10, with a cash ROCE of 24.7% (the cash generated each year relative to the capital employed: the higher it is, the harder each krona invested works) and cash per share up 63% a year over the measured period, a figure its low starting base probably inflates. But the stock now trades at over 37 times its free cash flow (the cash left once bills are paid and investments made), higher than 96% of its own past readings. My buy price assumes cash growth of only 2.6% a year and an exit multiple brought down to 25 times: that is what keeps it far from the market price, and it is a deliberately cautious choice.
The second quarter report, published on 21 July 2026, shows why the market does not discount anything: orders jumped 35% to SEK 22.2 billion (29% organic). But adjusted EBITA margin slipped to 17.0% from 17.8% a year earlier, and net debt to EBITDA rose from 0.60 to 1.11 after acquisitions. The good news is in the price, and the margin is falling anyway.
Ericsson and Epiroc: the two exceptions
Ericsson is the only one of the ten trading below my buy price: 94 kronor against 108. It trades at about 11 times its free cash flow, with a free cash flow margin of 12.3%. The trajectory calls for caution, though: sales are falling 4.5% a year over the measured period, and the second quarter of 2026, published on 14 July, confirmed the slope with SEK 52.7 billion in sales, down 6% year on year, and an adjusted gross margin of 48.4% (see Ericsson's investor page). Cash per share, meanwhile, grows by nearly 45% a year: I read that as an efficiency drive, not growth.
Why does the market pay so little for it? Because its customers, the telecom operators, spend in bursts: heavily when a new network rolls out, then they ease off. Ericsson is a cyclical that looks like a quality company. My firm view: the price is reasonable only if you expect no growth. One detail matters: for Ericsson as for Epiroc, my calculation uses the maximum cash growth I allow, 20% a year, because their cash per share has grown fast. If that pace slows, their buy price drops and the gap disappears. For more detail, read my Ericsson analysis.
Epiroc, which equips mines, trades 2% above my buy price: in practice, at the price. It scores 8 out of 10 with a cash ROCE of 22.6%, but trades near 38 times its free cash flow: its buy price also rests on cash growth of 20% a year, which its sales (7.7% a year) support without guaranteeing it.
Evolution: the highest margin, the most open debate
Evolution produces the live casino tables that online gambling sites stream from its studios. It is the most profitable company in the group: a free cash flow margin of 54.2% (out of 100 kronor of sales, 54 stay as available cash) and a cash ROCE of 99.7%, almost as much cash a year as the capital employed. It trades at only 13 times its free cash flow, yet its price is 97% above my buy price. The explanation lies in my calculation: it assumes cash growth of 3.8% a year and an exit multiple of 11 times, so it anticipates a slowdown.
The latest report, published on 17 July 2026, backs that caution: second quarter revenue fell 1.2% to 517.8 million euros (up 2.4% at constant currency), with a stable EBITDA margin of 65.9%. Live casino declined (437.3 million euros against 453.7), random-outcome games rose (80.5 against 70.6), and Asia fell 8.9%. Over five years sales grew nearly 18% a year: the machine keeps running, it no longer accelerates. The company launched a share buyback and settled a dispute with the UK regulator for 4.75 million pounds. A superb business whose growth story is on pause.
Nine stocks stay at 6 out of 10 or less
The other nine companies in the sample score lower for three kinds of reasons: falling sales, weak profitability, or a sector (banks) where my price calculation does not apply.
| Company | Score | What weighs |
|---|---|---|
| Telia | 6 | Sales down 1.8% a year, but a free cash flow margin of 15.6% |
| Handelsbanken | 6 | Bank: no buy price can be calculated, deposits distort free cash flow |
| Swedbank | 6 | Bank: same limit |
| Nordea | 5 | Bank: same limit |
| Investor | 5 | Holding company: cash ROCE of 1.9%, the value sits in its stakes |
| Essity | 5 | Free cash flow margin of 6.0%, cash per share slightly down |
| EQT | 5 | Share count up 4.5% a year, cash per share down 17% a year |
| Volvo | 4 | Free cash flow margin of 4.1%, flat sales, cash ROCE of 6.4% |
| Sinch | 4 | Sales down 0.8% a year, cash ROCE of 9.8% |
Three of them trade below my buy price: Telia (16% below), Sinch (5%) and Volvo (4%). They illustrate the opposite trap: a reasonable price for average quality is not a bargain, it is the normal price of an average company. I explain this mechanism in my article on value traps.
My verdict on Swedish stocks
Sweden is the country where quality is easiest to find and hardest to buy cheaply. Of 19 stocks, ten pass 7 out of 10, but only one offers a real price, Ericsson, and it is the one whose sales are falling. My reading: on Alfa Laval or Assa Abloy it would take a sharp price drop for the price to meet the quality, and paying today means betting the market is right to expect a lot.
The pattern resembles what I find elsewhere. In Germany quality lives in insurance and software, in Switzerland it is already paid for: when quality is well known, so is its price. These screens come from the grid I built to run them on any stock, which you can try on the Alfa Laval page.
FAQ
What are the best Swedish stocks in 2026?
Of 19 large stocks screened on 14 October 2026, Alfa Laval, Addtech and Ericsson score 9 out of 10, followed by Atlas Copco, Assa Abloy, Epiroc, Evolution and Lifco at 8. The score measures business quality, not price.
Are Swedish stocks expensive?
The best ones are: eight of the top ten trade between 70% and 166% above my buy price. Ericsson trades below it, Epiroc almost at it.
Why might a high-quality stock not be a good deal?
Because price matters as much as the business. An excellent company bought too dear can return little. So I judge quality first, then price, separately.
Related reading
- Italian stocks: beyond Ferrari, two real gems
- Dutch stocks: ASML isn't alone at the top
- Danish stocks: Novo Nordisk isn't the best of them
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About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).