Undiscovered Gems in Japan to Watch This September 2024

Japan's stock markets have shown resilience, with the Nikkei 225 and TOPIX indices recovering much of their losses from earlier volatility. This recovery, coupled with a hawkish outlook from the Bank of Japan, suggests a dynamic environment for small-cap stocks. In this context, identifying promising stocks involves looking for companies that can navigate economic shifts and leverage market opportunities effectively. Here are three undiscovered gems in Japan to watch this September 2024.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Nihon Parkerizing	0.31%	0.86%	4.40%	★★★★★★
Togami Electric Mfg	1.55%	3.53%	7.20%	★★★★★★
NJS	NA	4.97%	5.30%	★★★★★★
AOKI Holdings	28.27%	0.91%	37.15%	★★★★★★
Otec	9.81%	2.32%	-1.39%	★★★★★★
Soliton Systems K.K	0.58%	5.04%	16.76%	★★★★★★
Yashima Denki	2.93%	-2.38%	13.99%	★★★★★★
Kondotec	11.75%	6.85%	2.62%	★★★★★☆
Imuraya Group	26.21%	2.37%	32.09%	★★★★★☆
Toho Bank	98.27%	0.43%	22.80%	★★★★☆☆

Click here to see the full list of 753 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let's review some notable picks from our screened stocks.

Toyo Engineering (TSE:6330)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Toyo Engineering Corporation specializes in the engineering and construction of industrial facilities and has a market cap of approximately ¥44.18 billion.

Operations: Toyo Engineering Corporation generates revenue primarily from its Engineering Procurement Construction (EPC) segment, which contributed ¥268.94 billion. The company's market cap is approximately ¥44.18 billion.

Toyo Engineering, a relatively small player in Japan's construction sector, has shown impressive earnings growth of 415.5% over the past year, significantly outpacing the industry average of 21.2%. However, a ¥4.15 billion impairment loss on goodwill was recently recorded due to future business prospects of TS Participações e Investimentos S.A., impacting financial results for Q1 2025. Despite this setback, Toyo trades at nearly 30% below its estimated fair value and benefits from high-quality earnings with notable one-off gains totaling ¥5.1 billion as of June 30, 2024.

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

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

Press Kogyo (TSE:7246)

Simply Wall St Value Rating: ★★★★★★

Overview: Press Kogyo Co., Ltd. manufactures and sells automotive and construction machinery parts in Japan and internationally, with a market cap of ¥60.35 billion.

Operations: The company's primary revenue streams come from its automotive-related business, generating ¥160.84 billion, and construction machinery-related business, contributing ¥33.95 billion.

Press Kogyo, a notable player in Japan's auto components sector, has shown impressive financial health. Over the past five years, its debt-to-equity ratio improved from 12.6% to 6.8%, and earnings have grown by 20.7% annually. The company repurchased 2,261,000 shares for ¥1.50 billion as of July 16, 2024. Trading at a significant discount of around two-thirds below fair value estimates suggests potential upside for investors looking into this small-cap stock.

• Unlock comprehensive insights into our analysis of Press Kogyo stock in this health report.

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

NEC Capital Solutions (TSE:8793)

Simply Wall St Value Rating: ★★★★☆☆

Overview: NEC Capital Solutions Limited offers a range of financial services in Japan and has a market cap of ¥84.98 billion.

Operations: The company generates revenue primarily from its Lease Business segment, which accounted for ¥228.96 billion, followed by the Investment Business at ¥13.89 billion and Finance Business at ¥9.28 billion. The Other Business segment contributed ¥4.88 billion to the total revenue.

NEC Capital Solutions has shown impressive earnings growth of 63.7% over the past year, outpacing the Diversified Financial industry’s 27.1%. The company's net debt to equity ratio stands at a high 627.2%, though this has improved from 708.4% five years ago. Recently, SBI Shinsei Bank agreed to acquire a 33.32% stake in NEC Capital Solutions from NEC Corporation and Sumitomo Mitsui Finance and Leasing, with completion expected by October 2024.

• Click here and access our complete health analysis report to understand the dynamics of NEC Capital Solutions.

• Understand NEC Capital Solutions' track record by examining our Past report.

Next Steps

• Take a closer look at our Japanese Undiscovered Gems With Strong Fundamentals list of 753 companies by clicking here.
• Have a stake in these businesses? Integrate your holdings into Simply Wall St's portfolio for notifications and detailed stock reports.
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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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