Undiscovered Gems In Japan To Explore October 2024

As Japan's stock markets recently experienced a downturn, with the Nikkei 225 and TOPIX indices both declining amid election uncertainty, investors are increasingly interested in identifying resilient opportunities within this challenging environment. In such conditions, stocks that demonstrate strong fundamentals, adaptability to economic shifts, and potential for growth despite broader market volatility can be particularly appealing for those exploring undiscovered gems in Japan.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
KurimotoLtd	20.73%	3.34%	18.64%	★★★★★★
Nippon Denko	18.00%	4.31%	48.41%	★★★★★★
HeadwatersLtd	NA	19.26%	23.89%	★★★★★★
Innotech	38.96%	7.08%	6.36%	★★★★★☆
Nikko	31.99%	4.24%	-8.75%	★★★★★☆
AJIS	0.69%	0.07%	-12.44%	★★★★★☆
Marusan Securities	5.33%	1.01%	10.00%	★★★★★☆
Kappa Create	74.42%	-0.45%	3.62%	★★★★★☆
Toyo Kanetsu K.K	47.92%	2.34%	15.44%	★★★★☆☆
GENOVA	0.93%	33.82%	30.22%	★★★★☆☆

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.

Sumitomo DensetsuLtd (TSE:1949)

Simply Wall St Value Rating: ★★★★★★

Overview: Sumitomo Densetsu Co., Ltd. is a construction company with operations in Japan and several Southeast Asian countries, including Indonesia, Thailand, Cambodia, Myanmar, the Philippines, China, and Malaysia; it has a market capitalization of approximately ¥164.28 billion.

Operations: Sumitomo Densetsu generates revenue primarily from its Utilities Engineering Service segment, which accounted for ¥182.44 billion.

Sumitomo Densetsu, a relatively small player in Japan's construction sector, has demonstrated robust financial health with its debt to equity ratio improving from 3.8% to 2% over the last five years. The company reported an impressive earnings growth of 33.5% in the past year, outpacing the broader industry growth of 26.9%. Despite recent share price volatility, Sumitomo boasts high-quality earnings and positive free cash flow, underlining its operational efficiency and financial stability. Looking ahead, modest annual earnings growth of 0.56% is anticipated as it continues navigating market dynamics adeptly.

• Navigate through the intricacies of Sumitomo DensetsuLtd with our comprehensive health report here.

• Understand Sumitomo DensetsuLtd's track record by examining our Past report.

SAKURA Internet (TSE:3778)

Simply Wall St Value Rating: ★★★★★★

Overview: SAKURA Internet Inc. offers cloud computing services in Japan and has a market capitalization of ¥202.30 billion.

Operations: SAKURA Internet generates revenue primarily through its cloud computing services in Japan. The company's market capitalization stands at ¥202.30 billion.

SAKURA Internet, a smaller player in Japan's tech landscape, has shown impressive earnings growth of 99.7% over the past year, significantly outpacing the IT industry's 10.3%. The company has reduced its debt to equity ratio from 107% to 40.1% over five years and holds more cash than total debt, indicating financial prudence. Although shareholders experienced dilution recently, interest payments are well covered by EBIT at a multiple of 9.8x. SAKURA plans to increase dividends from ¥3.50 to ¥4 per share for the fiscal year ending March 2025 and anticipates net sales of ¥29 billion with an operating profit forecasted at ¥2.6 billion.

• Click here and access our complete health analysis report to understand the dynamics of SAKURA Internet.

• Gain insights into SAKURA Internet's historical performance by reviewing our past performance report.

Nohmi Bosai (TSE:6744)

Simply Wall St Value Rating: ★★★★★★

Overview: Nohmi Bosai Ltd. specializes in the development, marketing, installation, and maintenance of fire protection systems across Japan, China, other parts of Asia, and the United States with a market capitalization of ¥175.10 billion.

Operations: The company's primary revenue streams include Fire Alarm Systems, generating ¥44.38 billion, and Fire Extinguishing Systems, contributing ¥39.33 billion. Maintenance and Services also play a significant role with revenues of ¥32.44 billion.

Nohmi Bosai, a relatively small player in the fire protection sector, has demonstrated robust earnings growth of 21.9% over the past year, outpacing the broader electronics industry at 7.3%. The company operates debt-free, a notable shift from five years ago when its debt-to-equity ratio stood at 0.2%, highlighting prudent financial management. With high-quality earnings and positive free cash flow, Nohmi Bosai seems well-positioned for steady growth. Earnings are expected to increase by an average of 5.73% annually, suggesting potential value for investors seeking stability in niche markets like fire safety solutions in Japan's evolving landscape.

• Dive into the specifics of Nohmi Bosai here with our thorough health report.

• Explore historical data to track Nohmi Bosai's performance over time in our Past section.

Next Steps

• Dive into all 723 of the Japanese Undiscovered Gems With Strong Fundamentals we have identified here.
• Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks.
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Looking For Alternative Opportunities?

• 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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