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

OP Pohjola analysts expect Finnish listed companies' earnings to strengthen over the coming years as Finland's economic environment recovers and investment increases. The outlook is especially constructive for smaller listed companies, which have faced a prolonged weak period but could benefit disproportionately from the recovery. The report signals improving corporate fundamentals and sentiment, though no specific earnings or revenue-growth figures were provided in the available text.

Analysis

The investable implication is less a broad Finnish-beta call than a potential inflection in domestic cyclicals with high fixed-cost bases. If Finnish capex and construction-related demand recover, small-cap industrial, staffing, engineering and building-products companies can see operating profit grow materially faster than revenue; the same operating leverage also makes consensus estimates unusually vulnerable if the recovery stalls. The key distinction is balance-sheet capacity: firms that refinanced during the high-rate period may convert an earnings rebound into deleveraging, while leveraged peers remain exposed to refinancing costs.

Near term, the signal is unlikely to overcome liquidity constraints or a still-cautious foreign allocation backdrop; a broad rerating requires sequential evidence of orders, margins and domestic investment rather than improved analyst tone. Over 1-3 months, watch Finnish PMI new orders, construction permits, ECB easing expectations and quarterly order intake from large regional bellwethers such as KONE (KNEBV.HE), Metso (METSO.HE) and Valmet (VALMT.HE). A sustained improvement would likely spill into smaller OMX Helsinki names before earnings revisions fully catch up, but the liquidity premium means gains can reverse sharply on weak macro prints.

Contrarian risk: the small-cap recovery narrative may already be mechanically attractive after prolonged underperformance, but Finland's listed market has meaningful export exposure rather than pure domestic demand exposure. Weak German industrial activity, euro appreciation, or renewed tariff uncertainty could offset domestic improvement and prevent the anticipated margin recovery. The thesis is falsified by two consecutive months of deteriorating new-orders data, falling 2026 EPS revisions, or evidence that lower rates are not translating into investment commitments.

Key Decisions for Investors

• No immediate directional trade on the analyst commentary alone; establish a watchlist of OMX Helsinki small-cap industrials and domestic cyclicals, screening for net debt/EBITDA below 2.5x, positive FCF and meaningful fixed-cost leverage. Upgrade only after order-intake or guidance confirmation.
• For liquid exposure, consider a small 3-6 month tactical long in iShares MSCI Finland ETF (EFNL) versus a short broad euro-area equity proxy (FEZ) only if Finnish PMIs and EPS revisions turn positive relative to euro-area peers. Target a 5-8% relative move; exit if relative performance declines 4% or Finnish new orders weaken for two prints.
• Use KNEBV.HE, METSO.HE and VALMT.HE earnings as read-through catalysts rather than direct small-cap substitutes: improving European orders and margin guidance support adding domestic Finnish cyclical exposure; weaker orders or cautious 2026 commentary argue against the recovery basket.
• Avoid highly levered Finnish property, construction and consumer-discretionary names until financing-cost relief is visible in reported interest expense and forward guidance. Lower policy-rate expectations alone do not repair maturities or restore demand.