The Scandinavian Shopping List In A Time Of Bargains – Seeking Alpha

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Within this article, the company Novo Nordisk A/S (NVO) will be mentioned. For the reader, I’d like to disclose that I’m an employee of the company. The nature of my position is an office job that does not concern sales.
In your conquest to establish a diversified portfolio, you will often look towards your own country and its immediate neighbors. As such, it is easy to overlook industry-leading companies if they are not part of that filter. In this article, I’ve presented an overview of some of the Scandinavia’s leading companies.
It just happens that the four countries of this region in scope offer companies across multiple different industries, allowing the investor to monitor a multitude of opportunities should the right price present itself. I hope the information herein will prove to be useful. You shouldn’t miss out on great investment opportunities just because you aren’t familiar with this part of the market.
During the spring of 2021 I published an article here on Seeking Alpha titled “The Scandinavian Shopping List” without realizing there could be interest in a follow-up. Given that the market is significantly down YTD, it appears as a timely opportunity to present an updated version for 2022. I’ve also decided to add Finland to the scope, another strong economy in the northern part of Europe, meaning this article covers Denmark, Norway, Sweden & Finland. The debate as to whether Finland is actually part of Scandinavia is something I’ll leave to those who wish to go down the hallways of history, but in this instance, as Scandinavia isn’t a fixed term, I’ve opted for including Finland, albeit in a reduced scope compared to the other countries.
The reason as to why I have an interest in this part of the world is that I’m a Danish native, who for the first many years of my investment journey exclusively invested in Scandinavian/Northern European companies. Today, I hold a diverse portfolio with roughly 70% in North America, 20% in Europe, 8% in Scandinavia, and the rest in developing economy exchange-traded funds (“ETFs”).
There are multiple reasons as to why I hold most of my assets within North America. I’m primarily, but not limited to, a dividend growth investor, and companies within North America have a much more dedicated approach towards consistent dividend hiking. Further, that stock market is much larger, and many industries are dominated by North American companies.
While reading this, you should know that companies within Scandinavia may offer a dividend today, but that it might show unpredictable behavior as companies have a larger likelihood in terms of adjusting the dividend according to the economic cycle and performance of the company. Not all companies do so, but I suggest you look into it should you feel like investing at some point.
Also, there might be withholding tax to consider depending on where you are located. However, this should be made up for by the fact that, despite its size, Scandinavia is home to some of the world’s leading companies within several different sectors. Lastly, if you go with the ADR, always consider the trading volume, as it may be beneficial to go for the local ticker instead, where liquidity is ample.
I believe in holding a diversified portfolio, and despite these countries being small economies with populations equivalent to somewhere between Colorado or North Carolina, they are home to global industry leaders across the board. We all have portfolios where we struggle to find the right company within a given sector, and I believe that as an investor I’m potentially missing out if I limit myself to companies due to where the headquarter is located or where the ticker is traded.
In this article, you will see me discussing opportunities and companies to monitor within Scandinavia. I hope this will serve as inspiration for your own portfolio strategy.
Not everybody will be familiar with the Scandinavian economies, so I believe a few factual pieces of information will serve you well in building an understanding of how mature or developed the economies are.
If you are interested in the historical economic development within Scandinavia, you may browse up on its history via the following source. What you need to know is this. Measured on “ease of doing business” as ranked by The World Bank, Denmark ranks 4^th, the U.S. ranks 6^th, Norway ranks 9^th, Sweden ranks 10^th and Finland 20^th. These rankings are amongst OECD high income economies. On the Global Innovation Index, Sweden ranks 2^nd, the U.S. ranks 3^rd, Denmark ranks 6^th, Finland 7^th and Norway ranks 20^th. For the Human Development Index, which also contains education level, Norway ranks 1^st, Sweden ranks 7^th, Denmark ranks 10^th, Finland 11^th and the U.S. ranks 17^th.
The conclusion is that these small economies offer an attractive environment for its corporations to operate with access to a suitable business environment, an educated workforce and innovative environment. Seemingly all the necessary ingredients for these countries to harbor world-class companies – which they do.
Measured on GDP per capita Norway ranks 6^th, the U.S. ranks 7^th, Denmark ranks 10^th, Sweden ranks 16^th and Finland 19^th. As such, these countries all harbor wealthy citizens, which creates the foundation for a solid banking sector, which wouldn’t be captured in the exports listed above.
I’ve included a list of selected companies based mainly upon market cap. I’ve tried to keep it at companies with a market cap of $10 billion or more. In a few instances, I’ve deviated from this requirement at my own discretion.
I’ve selected ten companies from each country, Finland being the exception. With the leading indexes containing 20-25 companies per country, I couldn’t include all. I will not cover all the companies, but I’ve selected a number from the following tables, for which I will provide a bit of background and recent movements. In the tables you will see I’ve provided an indication of individual company’s industry ranking. If they are marked as “market leading,” it means that they are leading within their industry (typically) on a global scale. It doesn’t have to translate into a number one spot, but typically will do so. Otherwise, I’ve provided a specific rank indicated via a number. For a few, I’ve designated them “N/A,” as it wasn’t easily applicable to discuss a rank, i.e., in cases of conglomerates.

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The table above allows us to observe that the selected companies consist of a few major companies when measured on revenue, but also a range of significantly smaller ones with a revenue between $2-10 billion. You might be familiar with a few of the larger ones, but most likely not the smaller ones.
Now, I should remind the reader that I’m Danish and, therefore, follow the business media a little bit less for the neighboring countries.

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Where the Danish stock market was focused on green energy, pharmaceuticals, and med tech, the Swedish stock market is strong within different parts of heavy industry. Some of the industrial companies operate within several niches, and it is therefore difficult to determine whether the company as a whole is market leading, but they typically are within one or more of their divisions. Sweden has a proud history of success, especially within engineering, which translates into the companies that will be covered here.
For those comparing the table above to the one roughly one year ago, the difference in company valuations is significant. Forward P/E had an average of 29.3 one year ago, which is now 15.5 for the companies included. Average yield has also climbed from 2% to 3%, while revenue growth seen over a five-year period is substantially lower.
Seen from my perspective, the Swedish stock exchange provides some of the most interesting prospects in Scandinavia. One note, however: the Swedish currency has consistently depreciated against the USD over the last decade, which could hollow one’s investment, albeit slowly.
Measured on forward P/E, the Norwegian companies are currently the least expensive of the companies I’ve selected to represent each portion of the individual markets.

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The Norwegian market is again different from the previous two, especially in the sense that it is more focused on offshore and seafood. There are several stocks trading on the Norwegian major stock index that operate within the seafood industry that I didn’t include here. Norway is also a proud shipping nation.
Similarly to Sweden, the forward looking P/E levels have come down substantially compared to a year ago. This should elevate the possibilities of finding a good investment case amongst some of these companies.
This is the latest addition to my list, in comparison to my previous article. Finland comes with a disclaimer, as one of its top five export partners is Russia. This is only natural as they are neighboring countries, but it has resulted in a number of Finnish companies having to absorb substantial losses in the wake of the ongoing crisis, also resulting in changed economic outlooks as they have to change focus. There is no reason to overcomplicate the situation, but the prospective investor should dive into the financial performance to understand the historical and future exposure as well as current impact.
I’ve decided to only add five Finish companies, as my knowledge is a little bit limited. However, there are more interesting Finish companies in the large cap index.

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I’m only long a few of these companies, but I’m exposed to several via ETF holdings in either my brokerage or pension. There are still a couple of these companies, that I would very much like to add to my portfolio, particularly in Sweden and Finland.
Last year, I concluded that DSV from Denmark, Atlas Copco/Investor from Sweden, and Norsk Hydro/Orkla from Norway were my favorite picks.
This year, I would be very interested in having a closer look at GN Store Nord, which is trading at a significant discount compared to its direct competitor, Demant. Perhaps the market is overreacting? However, given DSV’s relative valuation, that company is also worth a look.
From Sweden, I would go with Investor, which has come down in valuation and has a strategy that I’m personally very much aligned with, while also being the proxy to the Swedish economy – as such being both a proxy and a diversification play at once.
In Norway, Yara International could be worth a look at they have succeeded in generating growth once more, while perhaps looking into some very positive years ahead, being a leading fertilizer company.
Lastly, from Finland, I believe Stora Enso or Kone are very interesting companies. I have to admit I’m always biased in favor of Kone. No matter the angle from which I study the company, it’s just a fortress.
I believe in diversification. Being from a small country, I’m almost forced to look outside my region for opportunities to identify industry leaders that I believe to be winners. Flipping that coin around, it also means I may benefit from the best of my local market and the best of the well-known North American stock market.
I believe those who aren’t familiar with the Scandinavian economies and companies potentially are missing out. As such, the reader can find a brief overview of selected companies across Scandinavia and will then have to decide for themselves if any of them are worth a deep dive. Conclusion being, that there are plenty of industry-leading companies to choose from.
Now, I’m very curious to hear your perspective
This article was written by
Disclosure: I/we have a beneficial long position in the shares of NVO, MHGVY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Within this article, the company Novo Nordisk A/S (NVO) will be mentioned. For the reader, I’d like to disclose that I’m an employee of the company. The nature of my position is an office job that does not concern sales.

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