Addtech or Lifco: which is better valued on the market?
2026-07-08 · By Lubin Danilo, founder of Lubin Investment
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Addtech and Lifco are two Swedish industrial conglomerates that grow by continuously acquiring small specialized businesses. Both show high fundamental quality, but Addtech trades close to fair value while Lifco, with slightly lower quality, trades richer than its margins justify.
Key takeaways
- Addtech: 9/10, no real failing criterion, 39.8% return on invested capital.
- Lifco: 8/10, but compressing margins and a price above my fair value estimate.
- Both grow through repeated acquisitions of small industrial companies, a model called "compounder" or "serial acquirer".
- Addtech trades roughly at its fair buy price; Lifco doesn't.
| Company | Score /10 | P/FCF | Capital returns | Expanding margins |
|---|---|---|---|---|
| Addtech (ADDT-B) | 9/10 | 29.3x | 39.8% | Yes |
| Lifco (LIFCO-B) | 8/10 | 30.0x | 35.7% | No (compressing) |
The industrial compounder, a little-known model in France
Addtech and Lifco belong to a family of Swedish companies known as compounders: instead of betting on a single product or brand, they continuously acquire small specialized industrial businesses (electronic components, equipment, technical distribution), let them run largely autonomously, and reinvest the cash generated into new acquisitions. It's a model almost invisible to the general public, but closely followed by investors seeking steady growth rather than a bet on a single business.
Addtech: the better quality of the two
Addtech scores 9 out of 10 in my screener, with no real failing criterion: its margins widen over time, a sign each acquisition adds efficiency rather than diluting it, and its cash return on invested capital reaches 39.8%, well above my 15% threshold. It trades at 29.3 times free cash flow, putting it almost exactly at its fair buy price under my model (discount close to zero).
Lifco: a notch lower on quality, at a price that doesn't reflect it
Lifco scores 8 out of 10, a very good score in absolute terms, but two nuances matter. First, its margins are compressing over five years, unlike Addtech's: the 'expanding margins' criterion fails. Second, at 30 times free cash flow, a multiple close to Addtech's, my valuation model judges Lifco overpriced relative to what its current fundamentals justify. In other words, the market is paying the same price for Lifco as for Addtech even though its margin trend is weaker.
What I take from this
Between the two, Addtech clearly comes out ahead on my quality/price grid: better score, widening margins, and a price with no excess. Lifco remains a good business, but the market seems to be granting it a price today that no longer fully matches my criteria. It's a good reminder that two companies with the same model and same country can deserve different conclusions once you look at quality and price separately.
FAQ
What is an industrial "compounder"?
A company that grows by continuously acquiring small specialized businesses, letting them run autonomously, and reinvesting the cash generated into new acquisitions rather than a single large project.
Addtech or Lifco, which is better valued?
Addtech, under my model: it trades roughly at its fair buy price, while Lifco trades richer than its current fundamentals justify.
Why does Lifco lose points on quality?
Its margins are compressing over five years, unlike Addtech's, which fails my 'expanding margins' criterion.
Are these Swedish companies accessible to international investors?
They're listed on the Stockholm stock exchange and accessible through most brokers offering access to European markets, but remain little covered by international financial media.
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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).