2025 Top picks +45% ytd & 2026 Top picks revealed
Published: 3.12.2025 17:39
Author: Enlight Research Team
Baltic Equities had a tough summer
Source: Nasdaq Baltic, Enlight Research (Moving averages)
Summary
Following the 2.9% Baltic Benchmark decline in Sep-Oct, Nov. was strong with a gain of 2.8% as Artea Bank, Infortar, and KN Energies posted double-digit gains. However, the Nov. Advance/Decline ratio (rising/falling stocks) of 0.8 shows the market’s gain was not broad-based. Overall, 2025 appears to be a constructive year with the Baltic Benchmark +14% year-to-date (as of 2 Dec.). This year’s winners among tradable stocks are Akola Group (+54%), KN Energies (+48%), and Merko Ehitus (+35%). With the Baltic Benchmark Index 50-day MAV just 1% below the 200-day MAV, we reiterate our “Positive” Baltic market outlook, mainly based on valuation. Our Overall Top pick list (3 stocks) is up 32% while our “Stable dividends” Top picks list (3 stocks) is up 45%. With this said, we switch 2 out of 3 names in both lists as we think some stocks need to consolidate after stellar gains and we see compelling new overlooked cases for 2026 (since 2023, we have only made two changes to our top pick lists). From a sector perspective, we like banks as interest rates seem to stabilize at current levels and retail bond investors are happy to take over non-performing loans i.e., the bank’s loan impairments might not be as bad as we feared (might even see reversals). From a country-perspective, we favor Lithuania who seem to do everything right, while Estonia is doing the opposite. Furthermore, the Lithuanian pension reform might trigger a rally in Lithuanian stocks (likely 30-50% of the pension savers will take their money out either to invest themselves or to spend it). See this Premium article for our 2026 Top picks.
Source: Nasdaq Baltic, Enlight Research (Moving averages)
Baltic Technicals
Despite the “weakish” Autumn (Baltic Benchmark lost 2.9% in Sep-Oct), the Baltic technical picture has not broken down (much due to strong Nov +2.8%) with the 50-day moving average just 1% below the 200-day moving average (1,629 vs. 1,645) as seen in below chart. Furthermore, among the Baltic tradable stocks, there are only five stocks in the minus year-to-date and they are only down 1-5% (adjusted for dividends, they are up). Meanwhile, the five year-to-date winners are plus 15-54%. Consequently, we keep our “Positive” outlook on the Baltic equity market even though we had a challenging Autumn.
Source: Nasdaq Baltic, Enlight Research (Moving averages)
Valuation still Attractive
As we are nearing 2026, we shift our PE focus to 2026E from 2025E. For dividend yield, we still focus on 2025E as dividends have yet to be announced and will be paid in 2026. The five companies in our universe (21 companies) with the lowest PE 2026E trade at an average multiple of 6.1x, which is lower than the 7.2x multiple in our last quarterly update (post Q2/25 reports). Part of the multiple contraction is due to the switch from 2025E to 2026E. The 2025E PE average for the top five companies is 6.3x i.e., still lower than in our last quarterly update and not far from 2026E multiple. The PE multiple has also contracted for our whole universe from 11.7x to 9.4x. The universe PE of 9.4x is 41% lower vs. the 2022 pre-war 16.0x multiple i.e., there is a 41% war discount on Baltic equities. The five stocks in our universe with the highest dividend yield have an average 2025E yield of 7.0% (up from 6.4% in our last quarterly update), compared to the whole universe yield of 4.7%. The 7.0% average yield for the Top five companies is on par with the Baltic corporate bond yield. Given the low equity valuation, we regard the equity yield as more attractive than the bond yield as there is also upside potential from share price appreciation.
Source: Enlight Research
Source: Enlight Research
Top picks
In our Overall Top Pick list, we take profits in Ignitis Grupe with a 23% gain (incl. divs) vs. +13% for the Baltic Benchmark Index (during the investment period) and Akola Group with a 26% gain (incl. divs) vs. -3% for the Baltic Benchmark Index (during the investment period). We still like both these stocks but believe they need to take a breather and consolidate. Our two new members of the Overall Top Pick list is KN Energies and Tallinna Sadam. We see good dividend outlook for KN Energies (2025E net yield 5.4%) and the valuation looks compelling (PE 2026E 7.1x). For Tallinna Sadam, we believe the positive trend in cargo will continue with or without peace in Ukraine.
In our Stable Dividends Top Pick list, we take profits in Merko Ehitus with a 106% gain (incl. divs) vs. +15% for the Baltic Benchmark Index and TKM Grupp with a 7% gain (incl. divs) vs. 15% for the Baltic Benchmark Index. Our two new members of the Stable Dividends Top Pick list are Ignitis Grupe and EfTEN. We believe Ignitis Grupe’s dividend track record (2025E net dividend yield 5.6%) since the IPO in 2020 (paid dividends every year) makes it suitable for the Stable Dividends Top Pick list. EfTEN has surprised on the upside with regards to dividends despite the Estonian recession and the guided 2025 dividend yield of 6.3% prompts us to include it in our Stable Dividends Top Pick list (see below tables).
Source: Enlight Research, Prices on Dec 2, 2025.