Undiscovered Gems in Japan to Explore This October 2024

As Japan’s stock markets experience a downturn, with the Nikkei 225 and TOPIX indices both declining, investors are closely watching economic indicators such as easing inflation and fluctuating exports. In this context, identifying overlooked opportunities in Japan’s small-cap sector can offer potential for growth, especially when these companies demonstrate resilience through innovative strategies or niche market positions amidst broader economic challenges.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

NameDebt To EquityRevenue GrowthEarnings GrowthHealth Rating Toho 69.52% 2.84% 55.65% ★★★★★★ KurimotoLtd 20.73% 3.34% 18.64% ★★★★★★ Ohashi Technica NA 1.57% -20.55% ★★★★★★ Toukei Computer NA 5.46% 12.14% ★★★★★★ Icom NA 4.68% 14.92% ★★★★★★ Imuraya Group 26.21% 2.37% 32.09% ★★★★★☆ GENOVA 0.93% 33.82% 30.22% ★★★★☆☆ Hakuto 56.93% 8.02% 27.72% ★★★★☆☆ Toho Bank 98.27% 0.43% 22.80% ★★★★☆☆ FDK 89.57% -0.88% 25.34% ★★★★☆☆

Click here to see the full list of 723 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let’s uncover some gems from our specialized screener.

Simply Wall St Value Rating: ★★★★★☆

Overview: Future Corporation offers IT consulting and services mainly in Japan, with a market cap of ¥160.50 billion.

Operations: The company generates revenue through IT consulting and services, with a focus on the Japanese market. Its financial performance is highlighted by a net profit margin of 10.5%, indicating efficient cost management relative to its revenue generation.

Future Corporation, a promising player in Japan’s tech sector, has shown impressive financial metrics. Over the past year, earnings grew by 10%, outpacing the IT industry’s 10.1% growth rate. The company trades at an attractive valuation, being 44% below its estimated fair value. Despite a rise in its debt to equity ratio from 0.06% to 34.7% over five years, Future maintains more cash than total debt and is free cash flow positive with high-quality earnings reported consistently. With future earnings projected to grow at approximately 14% annually, Future seems poised for continued success in its industry niche.

TSE:4722 Earnings and Revenue Growth as at Oct 2024

Simply Wall St Value Rating: ★★★★★★

Overview: Mitani Sekisan Co., Ltd. specializes in the production and sale of concrete products in Japan, with a market capitalization of ¥109.84 billion.

Operations: Mitani Sekisan generates revenue primarily from the production and sale of concrete products in Japan. The company’s financial performance is reflected in its market capitalization of ¥109.84 billion.

Mitani Sekisan, a promising player in Japan’s market, is trading at 20.8% below its estimated fair value, offering potential for investors. Over the past five years, the company’s debt-to-equity ratio has decreased from 0.5% to 0.3%, indicating improved financial health. Earnings have seen an annual growth of 13.8%, though recent growth of 9.1% lagged behind the industry average of 19.4%. The firm boasts high-quality earnings and positive free cash flow, signaling robust operations despite competitive pressures in the Basic Materials sector. Recent share repurchases totaling ¥133 million reflect strategic capital management efforts by Mitani Sekisan.

TSE:5273 Debt to Equity as at Oct 2024

Simply Wall St Value Rating: ★★★★★☆

Overview: Riso Kagaku Corporation is engaged in the printing equipment, real estate, and other sectors both in Japan and globally, with a market capitalization of ¥115.38 billion.

Operations: Riso Kagaku generates revenue primarily from its printing equipment segment, which accounts for ¥75.48 billion, followed by real estate at ¥1.10 billion. The company’s net profit margin shows a notable trend over recent periods, reflecting its financial efficiency in managing costs relative to revenue.

Riso Kagaku, a smaller player in the tech industry, has shown impressive earnings growth of 22.9% over the past year, outpacing the industry’s 7.5%. The company is financially robust with more cash than total debt and consistently positive free cash flow. Recent revisions in corporate guidance for 2024 indicate expected net sales of ¥38.2 billion and operating income of ¥2.9 billion, both surpassing prior forecasts due to favorable exchange rates impacting sales positively. Riso’s strategic share repurchase program recently saw it buy back 145,300 shares for approximately ¥500 million to enhance shareholder value amidst changing market dynamics.

TSE:6413 Earnings and Revenue Growth as at Oct 2024Where To Now?Curious About Other Options?

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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