3 high-growth gems in Sweden falling to attractive levels?
Small-cap compounders at lower price points
Hi all,
I thought I’d post a quick mid-week letter.
On a few high-growth, smaller-caps here in Sweden that are falling.
Who doesn’t love high-growth small caps?
And these are some of Sweden’s best. With all the good stuff that comes with it. Like:
revenue growth in the 20s or higher
sky-high margins
high ROIC and ROCE
lots of FCF
low or no debt
But they also have those sky-high PE ratios.
The ones that make you keep them on the Watchlist instead of the Buy list.
But now they’re starting to fall.
And maybe - just maybe - into buy territory.
Let’s have a look.
1. Hemnet
Perhaps my favorite on this list is Hemnet (HEM.ST).
I’ve written about them before. It’s Sweden’s top real estate website. To sell or hunt for homes.
They’ve been around for decades. They’re like part of Sweden’s social fabric.
Scrolling through listings on Hemnet is just something you do here.
And I love is this chart. Showing Hemnet’s:
high and climbing gross margin
rising revenue
and upward trending FCF, ROIC and ROIC
But it’s share price has started to fall.
It’s down about 30% since mid-February and 17% the past month.
Its PE is still super high. 52x trailing, and 34x forward.
But its PEG is at 1.0.
And it’s still expected to keep its revenue growing at 25% per year.
Very interesting stuff here.
2. Yubico
Next on the list: Yubico (YUBICO).
A cybersecurity company. Making hardware like security keys to combat fraud and phishing.
It’s been around since 2007 and has a super wide range of customers.
Including big tech giants like Google, Amazon, Microsoft and Facebook.
Plus banks, healthcare, government, crypto exchanges etc.
Very successful. And some founders are still owners and active in operations.
But its share price is now down:
20% the past month
42% YTD
55% since August
Its PE is still at 38x trailing and 28x forward.
High in my mind.
But what caught my eye: Alpha Spread puts them at highly undervalued.
Seeing it at about 40% below its intrinsic value.
With 74% upside to consensus targets.
3. Bonexsupport Holding
Third up: Bonexsupport (BONEX).
Biotech. An orthobiologics company healing bone defects caused by trauma, infection, or disease.
Until the start of this year, it was skyrocketing. Up some 400% the past two years.
But despite a recent climb, it’s down 30% YTD.
Its PE is still sick: 146x trailing and 63x forward.
Crazy high.
Likely because revenue is still expected to rise 40% on average the next two years.
And EPS is seen up 85% the next two years. On average.
So, crazy high PE. But crazy high growth. Now at a 30% discount.
Honorable mentions:
I can also point out a couple more northern stars that are trending lower.
CTT Systems
CTT Systems (CTT) makes humidity control products for airplanes.
It’s another smaller, high-growth company here that’s been trending downwards.
Average revenue seen up 22% the next two years. PEs around 30-40x.
I want to highlight that CTT’s share is down 40% or so the past year.
But it’s been rallying lately.
Up about 15% the past month and 10% the past week.
So it only gets a mention here.
Coloplast
Lastly, I can mention Coloplast (COLO-B).
Intimate healthcare products.
It’s neither high-growth nor small-cap. Nor Swedish. It’s one of Denmark and the Nordic region’s best companies.
But I thought I’d highlight that it’s been on the decline.
It’s still at a trailing PE of 30x.
But its down 20% this year and 34% off it’s 52-week high.
I thought all this was interesting.
Hope you do too.
Hi, I’m Joel. I analyze stocks and invest each week. And write about it all here. Trying to building an equity fund for the long term. I’m a former financial journalist for Dow Jones and The Wall Street Journal. And a current bank employee. I live in Stockholm, Sweden and started the Sherwood Investment Letter in January 2025. Purchases are not recommendations. Subscribe to the newsletter and Watchlist.
Sweden has so much nice small caps