Exploring Undiscovered Japanese Stocks July 2024

As of July 2024, Japan's stock markets have experienced notable declines, with the Nikkei 225 and TOPIX indices falling sharply over the past week. This downturn reflects broader concerns about global economic stability and pressures on Japanese exporters due to a strengthening yen. In such a market environment, uncovering stocks that demonstrate resilience or possess unique growth prospects can offer intriguing opportunities for investors looking to diversify their portfolios.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Central Forest Group	NA	5.16%	12.45%	★★★★★★
Nice	71.69%	-1.98%	36.48%	★★★★★★
QuickLtd	0.74%	9.42%	13.89%	★★★★★★
Otec	7.45%	2.06%	-0.77%	★★★★★★
NPR-Riken	13.26%	6.00%	32.17%	★★★★★☆
Nikko	32.39%	4.11%	-8.57%	★★★★★☆
Ogaki Kyoritsu Bank	130.22%	1.61%	-0.98%	★★★★★☆
Nippon Care Supply	8.20%	10.03%	0.30%	★★★★★☆
Nippon Ski Resort DevelopmentLtd	39.31%	2.95%	19.16%	★★★★★☆
Yukiguni Maitake	158.67%	-5.22%	-32.27%	★★★★☆☆

Click here to see the full list of 741 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let's uncover some gems from our specialized screener.

ISE Chemicals (TSE:4107)

Simply Wall St Value Rating: ★★★★★★

Overview: ISE Chemicals Corporation specializes in the production, processing, and trade of iodine and iodine derivatives, as well as nickel and cobalt compounds within Japan, with a market capitalization of ¥94.95 billion.

Operations: ISE Chemicals generates revenue primarily through the production and sale of chemicals, with a consistent gross profit margin trend showing an increase from 21.52% in December 2015 to 27.96% by December 2023. The company's cost structure includes significant expenditures on cost of goods sold (COGS), which consistently represents a major portion of its revenue, alongside operating expenses that include R&D and general administrative costs.

ISE Chemicals, a lesser-known entity in Japan's chemical sector, has demonstrated robust performance with a 20.2% earnings growth this past year, outpacing the industry average of 8.8%. The company maintains a healthy financial stance with its debt to equity ratio improving from 2.5% to 1.8% over five years and holding more cash than total debt. Despite forecasts suggesting a modest decline in earnings by an average of 1.4% annually over the next three years, ISE Chemicals' ability to generate free cash flow remains unshaken, underscoring its potential as an undiscovered gem in the market.

• Unlock comprehensive insights into our analysis of ISE Chemicals stock in this health report.

• Learn about ISE Chemicals' historical performance.

Monex Group (TSE:8698)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Monex Group, Inc. is an online financial institution offering retail brokerage services across Japan, the United States, China, and Australia, with a market capitalization of ¥186.19 billion.

Operations: The company generates revenue primarily through sales, with a consistently high gross profit margin, exemplified by a margin of 94.00% in June 2023. Significant operating expenses, including sales and marketing and general administrative costs, are key components of its financial structure.

Monex Group, a lesser-highlighted entity in Japan's financial sector, has demonstrated robust growth with a 251% earnings increase over the past year, outpacing the industry's 44%. Despite a projected average earnings decline of 5.5% annually over the next three years, its price-to-earnings ratio stands attractively at 10.9x against the market's 14.1x. Recently, Monex announced a share buyback plan to repurchase up to 14 million shares for ¥5 billion by mid-2025, underscoring its operational confidence and commitment to shareholder value.

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

• Understand Monex Group's track record by examining our Past report.

Trusco Nakayama (TSE:9830)

Simply Wall St Value Rating: ★★★★★☆

Overview: Trusco Nakayama Corporation, a wholesaler of machine tools, distribution equipment, and environmental safety products, operates both in Japan and internationally with a market capitalization of ¥160.37 billion.

Operations: The company generates revenue primarily through sales of its products, with a consistent gross profit margin around 21% over recent years. It incurs significant operating expenses, which include general and administrative costs that closely track its revenue growth, reflecting ongoing investment in operational management.

Trusco Nakayama, a lesser-known entity in Japan's trade distribution sector, showcases robust financial health with a net debt to equity ratio of just 6.2%, reflecting prudent fiscal management. The company's earnings have surged by 21.7% over the past year, outpacing the industry average of 6.1%. With a price-to-earnings ratio at an attractive 12.2x—below the Japanese market average of 14.1x—Trusco represents potential value for discerning investors seeking growth intertwined with stability.

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

• Gain insights into Trusco Nakayama's past trends and performance with our Past report.

Next Steps

• Dive into all 741 of the Japanese Undiscovered Gems With Strong Fundamentals we have identified here.
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Ready For A Different Approach?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
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• 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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