Undiscovered Gems In Japan Featuring Hodogaya Chemical And 2 Promising Small Caps

Japan's stock markets recently experienced significant volatility due to a rebounding yen and concerns over global growth, but have since stabilized with reassurances from the Bank of Japan. Amid this backdrop, discerning investors may find opportunities in lesser-known small-cap stocks that demonstrate resilience and growth potential. Identifying such promising stocks often involves looking for companies with strong fundamentals, innovative products or services, and a solid strategy to navigate current market conditions.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Ryoyu Systems	NA	1.08%	8.08%	★★★★★★
Intelligent Wave	NA	6.92%	15.18%	★★★★★★
Nihon Parkerizing	0.31%	0.86%	4.40%	★★★★★★
Kanda HoldingsLtd	30.47%	4.35%	18.02%	★★★★★★
Soliton Systems K.K	0.58%	5.04%	16.76%	★★★★★★
NJS	NA	4.22%	1.83%	★★★★★★
Otec	9.81%	2.32%	-1.39%	★★★★★★
Kondotec	11.75%	6.85%	2.62%	★★★★★☆
CAC Holdings	14.97%	-0.57%	5.02%	★★★★☆☆
Ogaki Kyoritsu Bank	139.93%	2.20%	-0.27%	★★★★☆☆

Click here to see the full list of 736 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let's dive into some prime choices out of from the screener.

Hodogaya Chemical (TSE:4112)

Simply Wall St Value Rating: ★★★★★★

Overview: Hodogaya Chemical Co., Ltd. primarily engages in the production and sale of organic industrial chemicals in Japan, with a market cap of ¥42.93 billion.

Operations: Hodogaya Chemical Co., Ltd. generates revenue primarily through the production and sale of organic industrial chemicals in Japan. The company's market cap stands at ¥42.93 billion.

Hodogaya Chemical, a small cap in Japan's chemical sector, has shown promising growth with earnings up 98.1% over the past year, outpacing the industry’s 8.8%. The company is trading at 61.9% below its estimated fair value, suggesting potential undervaluation. Recent financial guidance projects net sales of ¥48 billion and operating profit of ¥4.5 billion for FY2025. Dividend increases to ¥42.50 per share indicate strong shareholder returns and confidence in future performance.

• Unlock comprehensive insights into our analysis of Hodogaya Chemical stock in this health report.

• Assess Hodogaya Chemical's past performance with our detailed historical performance reports.

Base (TSE:4481)

Simply Wall St Value Rating: ★★★★★★

Overview: BASE CO., LTD. engages in computer software development and related work in Japan, with a market cap of ¥57.19 billion.

Operations: Base generates revenue primarily from its computer software development services in Japan. The company has a market cap of ¥57.19 billion.

Base Co., Ltd. has shown impressive performance with earnings growth of 19.4% in the past year, outpacing the IT industry's 12.3%. The company is debt-free, a significant improvement from five years ago when its debt to equity ratio was 54.6%. Trading at 52.8% below its estimated fair value, Base also announced a dividend increase to ¥50 per share for Q2 FY2024 from ¥40 last year, highlighting strong shareholder returns and high-quality earnings amidst volatile share prices.

• Delve into the full analysis health report here for a deeper understanding of Base.

• Evaluate Base's historical performance by accessing our past performance report.

Awa Bank (TSE:8388)

Simply Wall St Value Rating: ★★★★☆☆

Overview: The Awa Bank, Ltd. offers a range of banking products and services to individual and corporate clients in Japan with a market cap of ¥105.94 billion.

Operations: Awa Bank generates revenue primarily through interest income from loans and advances, as well as fees and commissions from banking services. Operating expenses include personnel costs, administrative expenses, and provisions for loan losses. The bank's net profit margin stands at 15.23%.

Awa Bank, with total assets of ¥3,941.8B and equity of ¥332.6B, has shown strong growth with earnings up by 42.6% over the past year, outpacing the industry average of 19.1%. Despite this growth, it faces challenges with a high level of bad loans at 2% and an insufficient allowance for bad loans at 39%. The bank repurchased 179,800 shares worth ¥499.99 million recently, indicating confidence in its valuation trading at nearly 40% below estimated fair value.

• Navigate through the intricacies of Awa Bank with our comprehensive health report here.

• Gain insights into Awa Bank's historical performance by reviewing our past performance report.

Turning Ideas Into Actions

• Click here to access our complete index of 736 Japanese Undiscovered Gems With Strong Fundamentals.
• Are any of these part of your asset mix? Tap into the analytical power of Simply Wall St's portfolio to get a 360-degree view on how they're shaping up.
• Simply Wall St is a revolutionary app designed for long-term stock investors, it's free and covers every market in the world.

Want To Explore Some Alternatives?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

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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