Stock picks from OP Pohjola's analysts for the end of the year – "The dry spell for small companies is coming to and end"

According to OP Pohjola's analysts, the earnings outlook for Finnish listed companies is currently brighter than in previous years. The analysts now see potential particularly in smaller listed companies that have struggled for a prolonged period and are now supported by the economic recovery in Finland.

In the latest Pörssitutka publication, OP Pohjola's analysts expect the earnings performance of Finnish companies to strengthen in the coming years as the economic environment improves and investment increases. In their follow-up of Finnish listed companies, the analysts expect a revenue growth of 19 per cent this year, and 10 per cent next year.

The analysts expect earnings growth to be broad-based both globally and in Finland. In addition to the strong growth in the technology sector, the growth is supported by cyclical industries, such as metal and forestry industries and industrial engineering.

"The revenues are now growing in companies on an exceptionally broad basis both in Finland and abroad. At the same time, in many industries the valuation levels remain moderate compared to their earnings outlook," says Antti Saari, Chief Analyst at OP Pohjola.

OP Pohjola's analysts see positive signs in the economy overall, as the global economy continues to grow and investment, particularly in AI, is increasing and employment has remained resilient.

"The underlying economic environment now resembles the pre-pandemic "Goldilocks" period in many respects. It refers to an economic environment where everything is "just right". The global economy is doing well at the moment, but at a moderate enough pace for the cost pressures faced by companies to remain in check and for central bankers not to have to curb price pressures with aggressive interest rate moves," Saari says.

According to Saari, the situation is now favourable for investors, although not too favourable.

Share picks for the end of the year favour industrial engineering, energy and domestic market companies

In OP Pörssitutka, the analysts list their favourite shares among Finnish companies for the end of the year. In their stock picks, the focus is on companies whose earnings are expected to grow more than the market anticipates.

Out of large domestic listed companies, the list includes Kalmar, Kone, Neste and Lumo Kodit.

"The outlook for the undervalued Kalmar is supported by growth in container traffic volumes and rising industrial capacity utilisation rates. In the case of Kone, the analysts pay attention, for example, to the stability of the service and modernisation business and significant company acquisitions which create value," Saari says.

According to the analysts, Neste's earnings performance is supported by strengthening demand for renewable fuels and a favourable price outlook, whereas the outlook of Lumo Kodit is supported by a shift in the rental housing market towards more favourable conditions for property investors.

Among small and mid-size listed companies, the analysts' favourites include Fodelia, F-Secure, NoHo Partners and Terveystalo.

"The prolonged dry spell for small companies is coming to and end. Finnish small and mid-size listed companies may carry significant potential if the recovery of the Finnish economy proceeds as expected. Companies that benefit from the strengthening domestic market look particularly attractive," Saari concludes.

OP Pohjola's analysts have published their stock picks in the edition of OP Pörssitutka published yesterday. OP Pörssitutka is a strategy publication for investors. Published twice a year, it provides outlooks on the economy and capital markets, and presents investment ideas.

Produced by OP Corporate Bank, OP Pörssitutka is an impartial and independent investment research publication. Material produced by OP Corporate Bank does not constitute investment advice and is not intended as an offer or encouragement to buy or sell financial instruments of any kind. All information presented in OP Pörssitutka is based on publicly available sources and data, which OP Corporate Bank regards as reliable. OP Corporate Bank is not responsible or liable for the financial performance of any investment decisions made on the basis of the material.

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OP Pohjola is Finland’s largest financial services group, with more than two million owner-customers and approximately 15,000 employees. We provide a comprehensive range of banking and insurance services for personal and corporate customers. OP Pohjola consists of OP cooperative banks, its central cooperative OP Cooperative, and the latter's subsidiaries and affiliates. Our mission is to promote the sustainable prosperity, security and wellbeing of our owner-customers and operating region. Together with our owner-customers, we have been building Finnish society and a better future for 120 years now. www.op.fi