Q2/26 Review & Top picks
How high can you go?
All 17 companies we cover have reported Q2 results, and estimates have been adjusted and published on the website. There was a slight positive tilt, with 9 out of 17 companies reporting better than estimated sales and 10 out of 17 companies reporting better than estimated earnings. The earnings tilt seems to have had a positive market effect. Since Jun 5, 2026, when we published our Q1/26 review with fresh estimates (now old est.), the Baltic Benchmark Index (includes div.) gained 1.9%, taking the year-to-date performance to 5.0% as of 11 Sep. The focus in today’s market is on how high interest rates can go. The US 10-year bond yield is currently 4.97% (5% rounded), and the 10-year German Bund yield is 3.51%. Experts have given up trying to figure out how high rates can go. This is especially true following US Treasury Secretary Bessent’s failure to bring long rates down by buying 10-year and 30-year Treasury securities. The big unknown is at what interest rate government bonds become more interesting than corporate bonds and equities. For example, the Estonian 10-year government bond yield is currently ~3.7%. What if it goes to 6%? Impossible? Well, remember that not so long ago the US 10-year bond at 5% also felt impossible. And Estonia still has a major challenge to balance its budget. So, the question is, will investors still buy unsecured corporate junk bonds at 8% yield if they can get 6% on government bonds? The same goes for equities (is an 8% dividend yield interesting vs. 6% on government bonds?). It is worth noting that the German Bund yielded 6–9% between 1990 and 1996. We are bottom-up fundamental investors, so we regard the preceding interest rate discussion as mere observations rather than predictions. From a fundamental perspective, the Baltics continue to look undervalued, with an average 2026E PE of 6.9x and a dividend yield of 7.6% for the five most attractive companies in our Baltic universe. Our Overall Top Picks are up 28.6%, while our Stable Dividends Top Picks are up 23.9% – both significantly better than the index. We made one change to our Overall Top Picks list. See article (Premium) for Top Picks and the list of lowest PE and highest Dividend yield stocks in the Baltics.
12.9.2026
