Discovering Japan's Undiscovered Gems This August 2024

Japan's stock markets have shown a robust rebound recently, with the Nikkei 225 Index gaining 8.7% and the TOPIX Index up 7.9%, driven by better-than-expected economic data and a weaker yen benefiting exporters. This positive sentiment creates an opportune moment to explore some of Japan's lesser-known small-cap stocks that could offer unique growth opportunities. In this environment, identifying promising stocks often involves looking for companies with strong fundamentals, innovative products or services, and potential for market expansion—qualities that can help them thrive even amidst broader market fluctuations.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Tokyo Tekko	10.81%	7.30%	7.30%	★★★★★★
QuickLtd	0.73%	9.61%	14.56%	★★★★★★
Nice	71.69%	-1.98%	36.48%	★★★★★★
Techno Quartz	18.64%	16.15%	22.17%	★★★★★★
HeadwatersLtd	NA	19.26%	23.89%	★★★★★★
NPR-Riken	15.31%	10.00%	44.55%	★★★★★☆
Kondotec	11.75%	6.85%	2.62%	★★★★★☆
AJIS	0.69%	0.07%	-12.44%	★★★★★☆
Yukiguni Maitake	170.63%	-6.51%	-39.66%	★★★★☆☆
Hakuto	56.93%	8.02%	27.72%	★★★★☆☆

Click here to see the full list of 749 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

We're going to check out a few of the best picks from our screener tool.

Tazmo (TSE:6266)

Simply Wall St Value Rating: ★★★★★☆

Overview: Tazmo Co., Ltd. manufactures and sells semiconductor manufacturing equipment in Japan and internationally, with a market cap of ¥47.53 billion.

Operations: Tazmo generates revenue primarily from the sale of semiconductor manufacturing equipment. The company's net profit margin stands at 8.35%.

Tazmo has shown impressive earnings growth, surging 271.4% over the past year, significantly outpacing the semiconductor industry average of -4.4%. The company’s net debt to equity ratio stands at a satisfactory 3.5%, down from 55.8% five years ago. Recent guidance revisions indicate strong performance with net sales projected at ¥16.24 billion and operating income expected to hit ¥2.84 billion, reflecting robust operational efficiency and profitability improvements for this small cap stock in Japan's tech sector.

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

• Review our historical performance report to gain insights into Tazmo's's past performance.

RAIZNEXT (TSE:6379)

Simply Wall St Value Rating: ★★★★★☆

Overview: RAIZNEXT Corporation, with a market cap of ¥92.93 billion, provides maintenance and engineering services in Japan.

Operations: The company generates revenue primarily through maintenance and engineering services in Japan. With a market cap of ¥92.93 billion, its financial performance is highlighted by key metrics such as gross profit margin or net profit margin (choose one based on the most interesting trend).

RAIZNEXT, a promising player in Japan, has seen its debt to equity ratio rise from 0.6% to 1.3% over the last five years. Despite this, it remains profitable and boasts high-quality earnings. The company's price-to-earnings ratio of 11.5x is attractive compared to the JP market's 13.3x average. Although earnings have declined by 6.5% annually over five years, recent growth of 13.5% shows potential for recovery within its industry context.

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

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

TokyotokeibaLtd (TSE:9672)

Simply Wall St Value Rating: ★★★★★☆

Overview: Tokyotokeiba Co., Ltd. specializes in renting horse racing facilities in Japan and has a market cap of ¥108.38 billion.

Operations: Tokyotokeiba Co., Ltd. generates revenue primarily through the rental of horse racing facilities in Japan. The company operates with a market cap of ¥108.38 billion, focusing on this niche segment within the entertainment industry.

Tokyotokeiba Ltd. has shown impressive financial health with a net debt to equity ratio of 10.5%, considered satisfactory, and a reduction from 28.8% over the past five years. The company repurchased 213,700 shares for ¥861.92 million recently, completing a total buyback of 720,300 shares worth ¥2,999.64 million this year. Additionally, earnings have grown by 13% annually over the last five years while trading at nearly half its estimated fair value enhances its attractiveness to investors seeking undervalued opportunities in Japan's market.

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

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

Next Steps

• Embark on your investment journey to our 749 Japanese Undiscovered Gems With Strong Fundamentals selection here.
• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.
• Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.

Ready For A Different Approach?

• 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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