Swiss stocks: the quality is known, and so is the price

2026-10-05 · By Lubin Danilo, founder of Lubin Investment

Nestlé, Sika, Givaudan and Novartis have a reputation for quality, but the price already reflects it: of six Swiss stocks I screened, four trade above my reasonable buy price. Only Swisscom and Partners Group sit below it, because of doubt rather than neglect.

Why does Switzerland have a reputation for quality?

Nestlé, Novartis, Sika, Givaudan: these names reassure every European investor. Global brands, dividends paid year after year, a stable country and a currency known for its strength. That reputation attracts many buyers, and when many buyers want the same thing, the price goes up.

The question of this article is simple: is that quality still for sale at a reasonable price? I ran six Swiss stocks through my analysis grid. It scores the quality of the business on ten criteria (margins, growth in cash per share, debt, return on capital), separately from the price. Then it computes a reasonable buy price: the one that would deliver about 15% a year over five years, with cautious assumptions.

For the price, I look at P/FCF: the share price divided by the free cash the company really generates after paying all its bills. A P/FCF of 17 means 17 years of that cash. The lower it is, the more undervalued the stock.

What do the numbers say about these six stocks?

Company	Quality score	P/FCF	Free cash margin	Sales growth per year (5 years)	Gap to buy price
Nestlé	6/10	17.5×	12.2%	0.7%	premium of 43.6%
Novartis	9/10	17.7×	26.9%	6.5%	premium of 11.0%
Sika	6/10	22.0×	11.9%	2.2%	premium of 67.9%
Givaudan	7/10	26.1×	16.2%	2.8%	premium of 49.5%
Swisscom	7/10	11.1×	20.0%	7.7%	discount of 44.6%
Partners Group	7/10	10.5×	60.7%	-1.6%	discount of 207% (take with caution)

A premium means the price is above the level where my model would deliver the target return; a discount means it is below. The table is clear: the four best-known names are all expensive. Only two, less familiar to the general public, fall under the bar. Let's see why, one by one.

Nestlé: an icon that no longer grows much?

Nestlé meets 6 of my 10 quality criteria. Sales grow 0.7% a year over five years, its free cash margin is 12.2%, and net debt is about 4.9 years of that cash. On the positive side, the share count falls 1.7% a year, a sign the group buys back its own shares.

The recent facts point the same way. In the first half of 2026, published on July 23, organic growth (excluding currency and acquisition effects) reached 3.6%, of which 1.5 points from volumes and 2.1 points from price increases, according to Nestlé's release. Net profit, meanwhile, fell 31.4%, per FoodNavigator.

My reading (inferred): more than half of the growth comes from prices, not volumes, and consumers do not accept endless price hikes. With a share price of CHF 74.86 against a reasonable buy price of CHF 42.20, the market is paying for a brand, not for growth. The 4.2% dividend is real, but it does not change the entry price. See the Nestlé page.

Sika and Givaudan: does the strong franc explain everything?

A Swiss group sells in dollars, euros and yuan but reports in francs. When the franc rises, those converted sales weigh less, even if activity does not move. It is a classic reading trap for Swiss stocks, and it is visible here.

Sika (construction chemicals) posted CHF 5.59 billion of sales in the first half of 2026: -1.5% in francs, but +4.0% in local currencies. It raised its full-year outlook to +3% to +6%, according to its July 28 release. Givaudan (fragrances and flavors) reports CHF 3,799 million: -1.7% in francs, +3.6% like for like. But its adjusted EBITDA margin slips from 25.2% to 24.3%, and net profit falls 19.8%, per Givaudan's release.

So yes, the franc explains the drop in reported sales. No, it does not explain the price. Sika is valued at 22 times its free cash flow and Givaudan at 26 times, while their sales grow 2.2% and 2.8% a year over five years, and Sika's margin is not widening. What the market rewards here is regularity. It has already paid for it: the premium reaches 67.9% for Sika and 49.5% for Givaudan.

Is Novartis the only real quality, and at what price?

Novartis is the best scored of the group: 9 criteria out of 10. Out of 100 francs of sales, about 27 end up as free cash. Sales grow 6.5% a year, cash per share 13.1% a year, and the share count falls 3.4% a year thanks to buybacks.

The price of CHF 117.58 is about 11% above my reasonable buy price of CHF 104.61. That is the smallest premium of the group: a drop of around ten percent would bring it into my zone. As with any pharma company, everything depends on renewing the drug portfolio as patents expire (a general sector risk). I detailed the case in my article on Novartis.

Why do Swisscom and Partners Group fall under the bar?

Swisscom is valued at 11.1 times its free cash flow, with a 20% margin and moderate debt (about 1.2 years of cash). Its 7.7% annual growth is largely bought: the acquisition of Vodafone Italia, merged with Fastweb, inflated sales. In the first half of 2026, revenue fell 3.0% to CHF 7,221 million, but EBITDAaL (earnings before depreciation, after leases) rose 3.3%, with +10.2% in Italy thanks to EUR 166 million of synergies, according to Swisscom. The market doubts the integration and the weight of telecom investment. The dividend is 4.1%.

Partners Group is a private equity manager. It lives on two revenue streams: management fees, stable because they are proportional to assets under management, and performance fees, a share of the gains when it sells its holdings. Those arrive in bursts. In the first half of 2026 they came to CHF 233 million, or 19% of revenue, with delayed exits, according to Partners Group. Assets under management reach USD 186 billion (+7%), with record fundraising of USD 16 billion.

Its free cash is highly irregular: the 60.7% margin and the displayed 207% discount come from that irregularity. I do not take them literally. A P/FCF at the 3rd percentile of its own history means the stock is rarely this cheap, but the market is waiting to see whether exits resume. Partners Group and Swisscom are cheap because of a specific doubt, not through neglect.

So, is Switzerland a good hunting ground?

My firm view: for the names everyone knows, quality is paid for in advance. Two lessons. First, reputed quality is not measured quality: Nestlé and Sika meet only 6 criteria out of 10. Second, the rare stocks below the buy price are there because the market doubts, and it is up to you to judge whether that doubt is excessive.

Two practical cautions. These stocks trade in Swiss francs, so there is currency risk, and Switzerland is not in the European Economic Area: they are not eligible for the French PEA. Dividends also suffer a 35% Swiss withholding tax, partly recoverable: check the details with your broker.

This is the sorting I wanted to be able to do for any stock, so I built it. The pages detail each criterion, and my methodology explains how the score and the buy price are computed.

FAQ

Are Swiss stocks expensive in 2026?

Of the six stocks studied, four trade above my reasonable buy price, from 11% for Novartis to 68% for Sika. Only two, Swisscom and Partners Group, fall below it, each for a specific doubt.

Why are Swiss groups' sales falling in francs?

They sell in many currencies and report in francs. When the franc strengthens, converted sales fall: Sika shows -1.5% in francs but +4.0% in local currencies in the first half of 2026.

Can you buy these stocks in a PEA?

No. Switzerland is not in the European Economic Area, so these stocks are not eligible for the PEA. They are held in an ordinary brokerage account, with currency risk on the Swiss franc.

What does a reasonable buy price mean?

It is the price at which my model would deliver about 15% a year over five years, with cautious assumptions on growth and exit valuation. It is not a forecast: it is an order of magnitude that moves if the assumptions move.

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).