Undiscovered Gems In Japan Featuring Shinnihonseiyaku And 2 Other Small Cap Stocks

As Japan's stock markets continue to show modest gains, with the Nikkei 225 Index rising 0.8% and the broader TOPIX Index up 0.2%, investors are increasingly looking towards small-cap stocks for potential growth opportunities amid a backdrop of economic stability and monetary policy adjustments. In this environment, identifying high-quality small-cap stocks like Shinnihonseiyaku can be particularly rewarding, as these companies often exhibit strong fundamentals and growth potential that may not yet be fully recognized by the broader market. A good stock in such conditions typically demonstrates robust financial health, innovative business models, and a clear path to sustainable growth—qualities that can help it thrive even amidst market volatility and shifting economic landscapes.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
NCD	11.89%	8.95%	25.43%	★★★★★★
Tokyo Tekko	10.81%	7.30%	7.30%	★★★★★★
Nitto Fuji Flour MillingLtd	0.80%	6.26%	4.41%	★★★★★★
KurimotoLtd	20.73%	3.34%	18.64%	★★★★★★
Nice	71.69%	-1.98%	36.48%	★★★★★★
Nikko	31.99%	4.24%	-8.75%	★★★★★☆
Kappa Create	74.42%	-0.45%	3.62%	★★★★★☆
MIRARTH HOLDINGSInc	266.33%	3.00%	-2.40%	★★★★☆☆
Toyo Kanetsu K.K	47.92%	2.34%	15.44%	★★★★☆☆
FDK	89.57%	-0.88%	25.34%	★★★★☆☆

Click here to see the full list of 757 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Underneath we present a selection of stocks filtered out by our screen.

Shinnihonseiyaku (TSE:4931)

Simply Wall St Value Rating: ★★★★★☆

Overview: Shinnihonseiyaku Co., Ltd. operates in the cosmetics, pharmaceuticals, and health food sectors both in Japan and internationally with a market cap of ¥37.95 billion.

Operations: Shinnihonseiyaku generates revenue primarily through its retail segment, specifically catalog and mail order sales, which amounted to ¥39.39 billion. The company's cost structure and profitability metrics are not detailed in the provided information.

Shinnihonseiyaku, trading at 46.5% below its estimated fair value, has seen earnings grow by 17% over the past year, outpacing the Personal Products industry’s 0.1%. Forecasts suggest a steady annual growth of 5.61%. The company is free cash flow positive and holds more cash than its total debt, indicating financial stability. With high-quality earnings and sufficient interest coverage, Shinnihonseiyaku presents a solid investment opportunity in Japan's market.

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

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

Ryobi (TSE:5851)

Simply Wall St Value Rating: ★★★★★★

Overview: Ryobi Limited, with a market cap of ¥64.02 billion, operates as a die casting manufacturer in Japan, the United States, China, and internationally.

Operations: Ryobi Limited generates revenue primarily from its die casting manufacturing operations across multiple regions, including Japan, the United States, and China. The company's financial performance is reflected in its market cap of ¥64.02 billion.

Ryobi, a notable name in the machinery industry, has shown robust performance with earnings growing by 44.4% over the past year, outpacing industry growth of 13.1%. With a Price-To-Earnings ratio of 6.1x compared to the JP market's 13.4x, it trades at an attractive value. The company's debt to equity ratio improved from 48.5% to 37% over five years and its interest payments are well covered by EBIT (15x coverage). Ryobi also announced a second-quarter dividend increase to JPY 42.50 per share from JPY 35 last year, payable on September 2, despite lowering full-year dividend guidance slightly from JPY 45 to JPY 42.50 per share.

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

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

Chiyoda IntegreLtd (TSE:6915)

Simply Wall St Value Rating: ★★★★★★

Overview: Chiyoda Integre Co., Ltd. manufactures and sells structural and functional parts for various products in Japan and internationally, with a market cap of ¥37.44 billion.

Operations: Chiyoda Integre Co., Ltd. generates revenue primarily from Japan (¥14.34 billion), Southeast Asia (¥14.54 billion), and China (¥12.75 billion).

Chiyoda Integre Ltd. has shown consistent performance over the past five years, with earnings growing at 12.3% annually and a current debt to equity ratio of 2.5%, down from 3%. Trading at 14.3% below its estimated fair value, it appears undervalued. Recently, the company repurchased 223,300 shares for ¥640.85 million in Q2 2024, reflecting strong shareholder confidence. Although its earnings growth of 14.4% last year didn't surpass the Electrical industry average of 20%, it remains a promising player in Japan's market.

• Take a closer look at Chiyoda IntegreLtd's potential here in our health report.

• Understand Chiyoda IntegreLtd's track record by examining our Past report.

Make It Happen

• Explore the 757 names from our Japanese Undiscovered Gems With Strong Fundamentals screener here.
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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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