Handelsbanken today publishes a review of the engineering sector where the bank recommends companies with early-cyclical characteristics, companies that show structural growth/are active in the energy transition and/or companies that have not been rewarded for implemented structural improvements.

The bank's favorite stocks in the sector are Alfa Laval, Autoliv, Beijer Ref, Epiroc, Metso, Sandvik, SKF, Tomra, Valmet, Volvo and Volvo Cars.

Handelsbanken further notes that despite a weak economy and weak leading indicators, the Nordic engineering sector returned to growth in the third quarter, partly thanks to easier comparative figures.

"The sector has been relatively strong, but quality has become increasingly expensive. Against this backdrop, we believe it may be appropriate to look at some of the early-cyclical companies where share prices have lagged," the bank writes.

Handelsbanken writes further.

"Supported by a strong order book and price increases that spill over to next year, we believe that 2025 will be a stable year for the Nordic engineering sector. We forecast sales to increase by an average of 4% and adjusted operating profit by 11% next year, implying margin expansion."