Discovering Japan's Hidden Stock Gems August 2024

Japan's stock markets have rebounded strongly, with the Nikkei 225 Index gaining 8.7% and the broader TOPIX Index up 7.9%, buoyed by better-than-expected U.S. economic data and a stronger-than-anticipated GDP expansion in Japan for the second quarter of the year. This positive momentum provides a fertile ground for discovering undervalued stocks that have yet to capture widespread attention. In this article, we will explore three lesser-known Japanese stocks that exhibit strong fundamentals and growth potential, making them intriguing candidates in today's market environment.

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%	★★★★★★
QuickLtd	0.73%	9.61%	14.56%	★★★★★★
Toukei Computer	NA	5.46%	12.14%	★★★★★★
Ohashi Technica	NA	1.57%	-20.55%	★★★★★★
KurimotoLtd	20.73%	3.34%	18.64%	★★★★★★
Uoriki	NA	3.90%	6.15%	★★★★★★
Techno Quartz	18.64%	16.15%	22.17%	★★★★★★
Techno Ryowa	1.77%	2.06%	5.32%	★★★★★☆
Ogaki Kyoritsu Bank	139.93%	2.20%	-0.27%	★★★★☆☆
Yukiguni Maitake	170.63%	-6.51%	-39.66%	★★★★☆☆

Click here to see the full list of 754 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Comture (TSE:3844)

Simply Wall St Value Rating: ★★★★★☆

Overview: Comture Corporation offers cloud, digital, business platform and operation, and digital learning solutions in Japan with a market cap of ¥50.60 billion.

Operations: The company's primary revenue stream is from solution services, generating ¥34.84 billion. Gross profit margin stands at 23%.

Comture Corporation's debt to equity ratio has improved significantly, dropping from 4.9% to 1.2% over five years. The company reported an 11% earnings growth last year, outpacing the IT industry's 10%. Currently trading at a substantial discount of 51.7% below its estimated fair value, Comture also announced a dividend increase to JPY 12 per share for the first quarter of FY2025. Additionally, the firm is forecasted to grow earnings by approximately 13.53% annually.

• Get an in-depth perspective on Comture's performance by reading our health report here.

• Assess Comture's past performance with our detailed historical performance reports.

Business Engineering (TSE:4828)

Simply Wall St Value Rating: ★★★★★★

Overview: Business Engineering Corporation plans, develops, sells, and leases information and communications systems worldwide with a market cap of ¥50.95 billion.

Operations: Business Engineering generates revenue primarily through the development, sale, and leasing of information and communications systems. The company operates on a global scale with a market cap of ¥50.95 billion.

Business Engineering has been showing promising signs, with earnings growing 12.6% over the past year, outpacing the IT industry’s 10%. The company is debt-free, a significant improvement from five years ago when its debt to equity ratio was 2.3%. Trading at 8.8% below our estimate of its fair value, it also boasts high-quality earnings and positive free cash flow. Earnings are forecasted to grow by 5.59% annually, indicating steady future prospects.

• Click here to discover the nuances of Business Engineering with our detailed analytical health report.

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

CURVES HOLDINGS (TSE:7085)

Simply Wall St Value Rating: ★★★★★★

Overview: CURVES HOLDINGS Co., Ltd. operates and manages women's fitness clubs under the Curves brand in Japan, with a market cap of ¥71.44 billion.

Operations: CURVES HOLDINGS generates revenue primarily from membership fees and franchise royalties. The company's net profit margin is 10.25%.

CURVES HOLDINGS has shown impressive financial health with its debt to equity ratio significantly reduced from 209.7% to 53.7% over five years, and earnings growth of 55.1% last year outpacing the Hospitality industry’s 34.5%. Interest payments are well covered by EBIT, boasting a coverage of 121 times. Recent guidance projects net sales between ¥34.6 billion and ¥35 billion for the fiscal year ending August 31, 2024, with operating profit expected around ¥4.9 billion to ¥5.1 billion and EPS ranging from ¥32.81 to ¥34.11.

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

• Gain insights into CURVES HOLDINGS' past trends and performance with our Past report.

Key Takeaways

• Delve into our full catalog of 754 Japanese Undiscovered Gems With Strong Fundamentals 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.
• Maximize your investment potential with Simply Wall St, the comprehensive app that offers global market insights for free.

Seeking Other Investments?

• 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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