Absolutely…
Atlas Copco is the second largest on the Stockholm Stock Exchange among the 1013 listed companies. The largest is Investor. Many people probably think that AstraZeneca and ABB are larger, but not.
My strategy has been to always buy more, regardless of what the market thinks. This is also a company you can always buy; but perhaps it is extra interesting now. The company is probably among the finest we have in the Swedish industrial sector and the share has historically performed accordingly. Understanding the company takes some time but can be summarized through these four areas where the end customer is a company:
The largest area is compressors. Large machines that supply factories with compressed air. The company’s Vacuum Technology segment has made a lot of headlines in recent years in light of the AI boom. This part of Atlas has the electronics industry as its largest customer group by far, with the semiconductor industry being an important component. Atlas Copco’s part of it is to create and maintain the environment required for semiconductor manufacturing.
Atlas Copco had an incredibly strong performance in the years after the pandemic, especially in 2021-2023. There we saw a recovery from Covid-19 and industrial high pressure in many important industries for the company. Unfortunately, that performance has slowed down in 2024-2025.
For example, we have the Energy Technology business area, where construction and civil engineering is a large customer segment. We all know how that business is doing today… But one day the ice will break.
If I may summarize what I thought was most important from the article, it would be:
- The valuation of P/E 26.8 for 2025 earnings is lower than their average of 30 in recent years. However, earnings per share should fall this year.
- The company is expected to continue its enormous success story of acquiring other companies.
- We are riding on great megatrends such as AI and energy efficiency
- Atlas Copco has had a major currency headwind, but it won’t last forever.
There is one thing that is not addressed and that I would like to highlight as a dividend investor. Atlas Copco is among the finest you can find in dividend growth. We have a history of over 40 years where the company has never lowered its dividend. In fact, the dividend has increased in most years.
If you calculate an annual average growth rate since 1988, it will be 12.33%. Then the increase since 2022 has also been very good. That said, next year’s growth will not look as good.
I feel quite happy with the purchases I’ve made so far and probably will increase it further, slowly. For those looking for quality, Atlas Copco is the right stock to buy here and now. Of course, it may take a while before the world turns around and Atlas gets its tailwind back, but then it could also happen quickly.
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