July 2024 Insight Into Three Japanese Stocks Estimated To Be Below Market Value

Amidst a challenging week for Japan's stock markets, with the Nikkei 225 and TOPIX indices experiencing notable declines, investors might find potential opportunities in stocks that appear undervalued relative to their fundamentals. In this context, understanding what constitutes a good investment involves looking for companies with robust financial health and potential for growth, which may be overlooked in turbulent times.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Persol HoldingsLtd (TSE:2181)	¥252.10	¥489.61	48.5%
Plus Alpha ConsultingLtd (TSE:4071)	¥1919.00	¥3679.41	47.8%
Sumco (TSE:3436)	¥2341.00	¥4661.71	49.8%
FP Partner (TSE:7388)	¥2867.00	¥5612.91	48.9%
Visional (TSE:4194)	¥7650.00	¥15075.41	49.3%
Cyber Security Cloud (TSE:4493)	¥2190.00	¥4309.51	49.2%
Macromill (TSE:3978)	¥856.00	¥1679.52	49%
Japan Pure ChemicalLtd (TSE:4973)	¥3310.00	¥6366.78	48%
Bushiroad (TSE:7803)	¥379.00	¥724.09	47.7%
Atrae (TSE:6194)	¥871.00	¥1715.46	49.2%

Click here to see the full list of 94 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Here's a peek at a few of the choices from the screener.

Adventure (TSE:6030)

Overview: Adventure, Inc. operates an online travel reservation platform known as skyticket and has a market capitalization of approximately ¥38.85 billion.

Operations: The company generates its revenue primarily through its online travel reservation platform, skyticket.

Estimated Discount To Fair Value: 46.1%

Adventure Inc. is trading at a significant discount, 46.1% below its estimated fair value and more than 20% under DCF valuation, indicating potential undervaluation based on cash flows. Despite lower profit margins this year compared to last, the company's earnings are expected to grow by approximately 40% annually, outpacing the Japanese market average significantly. Recent strategic buybacks totaling ¥2.5 billion for 7.31% of shares underscore management's confidence and commitment to capital efficiency, although share price volatility remains a concern.

• The analysis detailed in our Adventure growth report hints at robust future financial performance.
• Get an in-depth perspective on Adventure's balance sheet by reading our health report here.

Insource (TSE:6200)

Overview: Insource Co., Ltd., operating in Japan, specializes in offering a range of educational services including lecturer dispatch training and open lectures, with a market capitalization of ¥74.25 billion.

Operations: The company generates revenue primarily through its Education Service Business, which amounted to ¥12.06 billion.

Estimated Discount To Fair Value: 37.6%

Insource Co., Ltd. is perceived as undervalued, trading 37.6% below its estimated fair value of JPY 1,417.78, with recent corporate guidance revisions suggesting robust financial health: a projected net profit increase to JPY 3,250 million and a raised dividend forecast to JPY 19.5 per share. Despite this positive outlook and a significant expansion in operations across Japan, concerns linger over its unstable dividend history and highly volatile share price in recent months.

• Insights from our recent growth report point to a promising forecast for Insource's business outlook.
• Delve into the full analysis health report here for a deeper understanding of Insource.

BuySell TechnologiesLtd (TSE:7685)

Overview: BuySell Technologies Co., Ltd. operates in the kimono and branded goods reuse sector in Japan, with a market capitalization of approximately ¥53.96 billion.

Operations: The firm primarily generates its income from the reuse of kimonos and branded merchandise.

Estimated Discount To Fair Value: 42.5%

BuySell Technologies Ltd., priced at ¥3770, is significantly below the estimated fair value of ¥6558.43, marking it as undervalued based on discounted cash flows. The company's revenue and earnings are expected to grow at 18.7% and 29.82% per year respectively, outpacing the Japanese market averages of 4.3% and 8.9%. Recent corporate guidance revisions have increased earnings forecasts for FY2024, reflecting stronger financial performance than initially anticipated. However, its debt is poorly covered by operating cash flow, adding a layer of financial risk.

• Our growth report here indicates BuySell TechnologiesLtd may be poised for an improving outlook.
• Unlock comprehensive insights into our analysis of BuySell TechnologiesLtd stock in this financial health report.

Make It Happen

• Click this link to deep-dive into the 94 companies within our Undervalued Japanese Stocks Based On Cash Flows screener.
• Hold shares in these firms? Setup your portfolio in Simply Wall St to seamlessly track your investments and receive personalized updates on your portfolio's performance.
• Simply Wall St is a revolutionary app designed for long-term stock investors, it's free and covers every market in the world.

Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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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