By A strong economy
In Europe, Finland is a model, as well as its Scandinavian partners, with a debt-to-GDP ratio about 49%, a GDP growth rate of 2.9% and an unemployment rate of 7.8% in 2011 (source: CIA). Moreover, the strong fiscal situation allows the country to benefit from automatic stabilizers that, if growth is below expectations, limit the negative impacts (source: OECD).
The Finnish economy is highly industrialized compared to other developed countries: 29.2% of GDP came from industry sector in 2011. It is 19.2% in the United-States, 28.6% in Germany and 46.8% in China.
The country is strongly competitive in manufacturing. It is based on the wood, metals and engineering industries. The climate is harsh; forestry is an additional source of income for the rural population. In addition, Finland is a leading European producer of nickel, gold, copper and zinc. Finally, with 1,642 doctorates in 2009 (source: Ministry of Education), three times the number produced in the early 1990s, the Nordic country has a highly qualified workforce.
The Nordic country advocates free trade and has a very active foreign exchange market. Exports have decreased but should resume with economic recovery by the end of the year. In 2011, Finland has a trade balance of +4.6 billion dollars. The main partners are Russia (13.6% of trade flows in 2011), Sweden (13.1%) and Germany (12%).
Good Surperformance ratings
The Surperformance ratings emphasize the country performance. It currently seems to offer a trading opportunity because it has the highest trading rating in Europe and in the world. This can be explained by a very attractive valuation. Indeed, the NASDAQ OMX Helsinki (in white on the chart below) has an "enterprise value / sales" ratio below the Euro Stoxx 50 (in brown) and the MSCI World Index (in green).
Furthermore, it has a high yield, which gives an interesting defensive dimension. On May 4, according to Bloomberg estimates, it was 5.27%, making it one of the highest in Europe.
Finally, analysts polled by Thomson Reuters are rather optimistic about the average target price and they reach a large buyer consensus. The country has a good potential rating and especially a significant business predictability rating. Thus, it seems that it has good growth prospects with a highly predictable activity.
Top 10 NASDAQ OMX Helsinki
Thanks to Superformance Market Screener, we have established a list of potential investments according to our criteria. We rely on trading rating, valuation, yield and business predictability and we eliminate small caps.
| Company | Sector | Market Capitalization | Performance YTD |
| YIT | Engineering / Construction | 1 880M | 20,3% |
| Konecranes | Construction Machinery | 1 242M | 49,0% |
| Huhtamaki | Packaging | 1 245M | 32,9% |
| Outotec | Mining / Metals | 1 766M | 5,8% |
| Raisio | Food Processing | 407M | 5,4% |
| Metso | Industrial Machinery | 4 638M | 7,4% |
| Ramirent | Industrial Machinery | 674M | 15,5% |
| Fiskars | Appliances / Tools / Housewares | 1 298M | 14,0% |
| Kone | Heavy Electrical Equipment | 13 037M | 27,6% |
| Orion | Pharmaceuticals | 2 310M | 8,2% |
Glossary of ratings:
Valuation
“Valuation” rating is based on the EV/Sales ratio for the current fiscal year and the next one. The lower the valuation is, the better is the rating. The goal is to rank companies according to valuation and to identify companies with the lowest valuation.
Yield
“Yield” rating is based on the dividend yield. The higher the dividend yield is, the better is the rating. The goal is to measure how much cash flow you are getting for each dollar invested in an equity position and identify the best companies.
Potential
“Potential” rating is based on the average target price fixed by the Thomson Reuters consensus. The higher target price is, the better is the rating. The goal is to identify companies that have, according to analysts, the strongest upside potential.
Business Predictability
“Business Predictability” rating is based on the dispersion of analysts estimates on the evolution of the company's business in the coming years (range estimates). More concentrated estimates are, the better is the rating. The goal is to rank companies according to visibility and identify companies whose business is highly predictable.
Trading Rating
“Trading rating” is based on a weighted average of the following criteria: Valuation, EPS revisions (short term) and Business Predictability. Undervalued companies, which EPS have been revised upwards in recent weeks, with good business predictability, will have the best ratings. The goal is to rank companies according to several criteria for short-term investment.
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