Investing in Your Backyard: Scandinavia

Break out the pickled herring and aquavit -- it's a backyard investing smorgasbord!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're looking overseas to Scandinavia -- land of the Vikings, socialized health care, and five-week vacations. Let's turn up the heat in the sub-Arctic Nordic countries to find some hot investments.

If you happen to live in Copenhagen or Trondheim, you already have a few advantages when it comes to evaluating the local market, such as access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. Of course, it would help to know Swedish or Finnish, so you can soak in the local business press.

Even if you're not a local, you might still want to know whether the weather matches the business climate -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are some of the largest companies headquartered between Reykjavik and Kuopio, from Nordkapp to Esbjerg.

Finnish Nokia and Swedish Ericsson are two of the largest players in the mobile phone market worldwide. Nokia is the worldwide leader in phone sales, but Ericsson's mobile infrastructure operations in particular dominate that market, to the point where some of its rivals have spun off their infrastructure segments into joint ventures with other giants, just to stay competitive. Ericsson has remained on top, regardless. Here's what one CAPS Fool had to say about the Swedish telecom titan:

Ericsson went straight to the source... they don't have to worry about treading lightly in China. They got the Government's backing. Sky's the limit... $1 billion today... and with their partnership with Sony for handsets they are going to skyrocket.

Income Investor pick Norsk Hydro is about to merge with fellow Norwegian oil and gas giant Statoil (NYSE:STO), resulting in combined offshore oil extraction of 1.9 million barrels per day, plus a strong extracted-aluminum operation. The Norwegian government will own more than two-thirds of StatoilHydro, which looks like strong incentive for a business-friendly political environment. And as a CAPS All-Star player said only a few weeks ago, "Energy, north sea oil, and a nice currency appreciation aspect make this a compelling long run choice."

Let's drop some names!
It's easy to forget about the Swedes, Finns, Norwegians, Danes, and Icelanders, because they seem so distant and disconnected from the American economy. But you do so at your own risk. Collectively, the publicly traded firms headquartered in greater Scandinavia carry a total market cap of $1.25 trillion today. Among the 12 companies that trade on the major U.S. exchanges and are rated in CAPS, the average score is a mind-blowing 3.9 stars, with nary a one-star stock among them. Only Icelandic biotech deCODE Genetics (NASDAQ:DCGN) carries two stars.

You may also have heard of toolmaker Sandvik, beer brewer Carlsberg, commercial builder Skanska, or household machinery makers Electrolux and Husqvarna. You can buy stock in all of those Nordic businesses.

Frozen Foolish takeaway
The Nordic countries tend to have stable political systems and a high standard of living, including cheap nationalized health care. The educational systems are excellent, and the Swedish government will pay its citizens to go to college -- even if you go abroad. (Thanks, guys. Florida State got your checks.)

Moreover, the euro keeps appreciating against other major world currencies like the dollar and the yen. That's obviously good for Finland, where the euro is the official currency, but also for the other Vikings, most of whom have tied their various flavors of krona to the European mint. Most of the Nordic stocks trading on American markets are ADRs, with an underlying base stock somewhere in Europe. (Autoliv, which trades directly on the NYSE, is the notable exception.) So when those exchange rates move, all of these share prices tend to move in unison. A weak dollar is good for foreign investors.

Call me biased, but I love the Scandinavian market, and so does the average CAPS player. The Nordic stock exchange (currently the object of a bidding war between Borse Dubai and Nasdaq) has strict reporting standards, compatible with SEC requirements, so it's usually easy to find the financial data you need to make an informed decision. Have a look around the fjords and forests of Hardanger and Uppland the next time you're looking for a high-quality investment opportunity. What you find might surprise you.

Do you agree? Disagree? Feel free to weigh in on the Nordic market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. Curious about the CAPS voices quoted above? Dig in and find them for yourself -- maybe these wise Fools have more to tell you. And if Stockholm and Helsinki isn't your 'hood, maybe we'll come around where you live the next time.

Further Foolishness:

• Swedbank: A Different Kind of Neighborhood Bank
• H&M: In Style Around the World
• Norway Says "No Way!"
• Sweden Takes Off
• 3 Stocks That Stack Your Odds