Hi folks,
We often talk about tech hypes and dividend kings here. But today I want to take up the cudgels for quality European work. As you know, I live in Scandinavia and therefore sometimes have a different view of the shares here.
I have bought $ATCO B (-0.02%) Atlas Copco (the one from Sweden) and wanted to share my thoughts with you.
In a nutshell: For me, this is the "secret giant" that there is hardly any way around.
What do they actually do?
At first glance: Yawning boredom. They build compressors, vacuum pumps and industrial tools.
But the second glance is amazing:
The "fourth energy source": every factory in the world needs compressed air. No matter whether cars, food or pharmaceuticals are being produced. Without Atlas Copco, the production line stands still.
The AI shovel vendor: Very few people know that the production of modern microchips (Nvidia, TSMC & Co.) requires absolutely high-vacuum chambers. Atlas Copco is the world market leader here. Anyone who believes in AI must also believe in Atlas.
Why I celebrate the share (The Quality Check):
I pay extreme attention to the figures and not to stories.
And the figures here are brutal:
Margin: They have an operating margin of over 21-22%. That's almost impossible for an industrial company. That's more on a tech level.
Moat: They not only sell the machine, but also the service subscription. This means that revenue continues to flow even when no new factories are being built.
Stability: The company is extremely decentralized. Hundreds of small units that run like start-ups. No bureaucratic tanker.
The catch:
Quality has its price. The share is almost never "cheap". You rarely see a P/E ratio of less than 25, usually you pay more like a 30 multiple.
At ~1.7%, the dividend also looks puny at first.
But: It is extremely safe and has been raised almost every year for decades (or there are special distributions). It is a compounder, not a high-yielder.
My conclusion:
For me, this is the perfect stock to "buy and leave". It combines old industrial strength with new tech fantasy (chip production).
Tip: If you get in, take a look at the B share (SE0017486897). Although it has fewer voting rights (which may not matter to us), it is usually cheaper than the A share and pays exactly the same dividend. This drives up the yield somewhat.
How many of you already have the Swedes in your portfolio? Or is the valuation currently too high for you?
Let's hear it!
Greetings from 🇩🇰
