Exploring Japan's Undiscovered Gems In October 2024

As Japan's stock markets face volatility amid new political leadership and evolving economic policies, the Nikkei 225 and TOPIX indices have experienced notable declines. In this dynamic environment, identifying promising stocks requires a focus on companies with solid fundamentals and resilience to macroeconomic shifts.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Togami Electric Mfg	1.39%	3.97%	10.23%	★★★★★★
Ryoyu Systems	NA	1.08%	8.08%	★★★★★★
Central Forest Group	NA	7.05%	14.29%	★★★★★★
Otec	9.81%	2.32%	-1.39%	★★★★★★
Uoriki	NA	3.90%	6.15%	★★★★★★
Nippon Denko	18.00%	4.31%	48.41%	★★★★★★
Techno Smart	NA	6.07%	-0.57%	★★★★★★
Maezawa Kasei Industries	0.81%	2.01%	18.42%	★★★★★★
Yashima Denki	2.93%	-2.38%	13.99%	★★★★★★
Mizuho MedyLtd	NA	19.43%	34.66%	★★★★★★

Click here to see the full list of 733 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let's explore several standout options from the results in the screener.

SAN-ALTD (TSE:2659)

Simply Wall St Value Rating: ★★★★★★

Overview: SAN-A CO., LTD. operates a chain of supermarkets in Okinawa with a market capitalization of ¥176.69 billion.

Operations: SAN-A CO., LTD. generates revenue primarily from its retail segment, which accounts for ¥221.26 billion, and a smaller portion from convenience stores at ¥8.39 billion.

SAN-A CO., LTD. seems to be an intriguing player in Japan's market, trading at 41.8% below its estimated fair value and showcasing a robust earnings growth of 34.4%, outpacing the Consumer Retailing industry’s 22.2%. The company is debt-free, enhancing its financial stability and removing concerns over interest payments. Despite lowering its dividend to ¥55 from ¥110 per share, SAN-A remains profitable with high-quality earnings and positive free cash flow, suggesting resilience in volatile markets.

• Dive into the specifics of SAN-ALTD here with our thorough health report.

• Learn about SAN-ALTD's historical performance.

Daiichikosho (TSE:7458)

Simply Wall St Value Rating: ★★★★★☆

Overview: Daiichikosho Co., Ltd. specializes in the sale and rental of commercial karaoke systems in Japan, with a market capitalization of approximately ¥193.60 billion.

Operations: The company generates revenue primarily from its Commercial Karaoke segment, contributing ¥61.10 billion, and the Karaoke and Restaurant Business, adding ¥65.50 billion. The Music Soft segment brings in an additional ¥6.50 billion to the overall revenue stream.

Daiichikosho, a notable player in Japan's entertainment sector, has seen its earnings grow by 49.7% over the past year, outpacing the industry average of -14.1%. The company maintains a satisfactory net debt to equity ratio of 19.5%, although this has increased from 16.1% to 50.1% over five years. Recently, it repurchased shares worth ¥2 billion and extended its buyback plan till October 2024, reflecting confidence in its valuation with a P/E ratio of 15.4x against an industry average of 24.2x.

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

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

Okinawa Cellular Telephone (TSE:9436)

Simply Wall St Value Rating: ★★★★★★

Overview: Okinawa Cellular Telephone Company offers telecommunication and mobile phone services in Japan with a market capitalization of ¥202.67 billion.

Operations: The company generates revenue from its telecommunications business, amounting to ¥79.30 billion.

Okinawa Cellular, a nimble player in Japan's telecom sector, shines with a debt-free balance sheet and high-quality earnings. Its recent earnings growth of 6.2% outpaced the industry average, which saw a -6% change. The company appears undervalued, trading at 28.7% below its estimated fair value. A recent buyback of 572,200 shares for ¥2.31 billion highlights its commitment to shareholder value enhancement and potential future growth prospects in the wireless market.

• Take a closer look at Okinawa Cellular Telephone's potential here in our health report.

• Assess Okinawa Cellular Telephone's past performance with our detailed historical performance reports.

Turning Ideas Into Actions

• Gain an insight into the universe of 733 Japanese Undiscovered Gems With Strong Fundamentals by clicking 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.
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Looking For Alternative Opportunities?

• 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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