Sandvik AB

“Sandvik is a rare industrial with genuine multi-layered moats — aftermarket lock-in in mining consumables, switching costs in premium cutting tools, and a compounding data advantage in underground mining automation — delivering 18–22% ROIC with clean balance sheet and 85–95% FCF conversion. However, at SEK 399.60 (29x forward earnings, ~23x EV/EBITA, near 52-week highs), the base case 10-year return is only ~8–9% annualized, providing no compensation for SMS structural drag, China geopolitical risk, or software M&A execution uncertainty. The business is excellent; the price is not. TRACK for a 15–20% pullback to approximately SEK 320–340 where the risk/reward becomes compelling.”