Japanese Exchange Stocks That May Be Undervalued In October 2024

In October 2024, Japan's stock markets have experienced a downturn, with the Nikkei 225 Index and TOPIX Index both showing declines amidst easing domestic inflation and speculation around the Bank of Japan's interest rate policies. In this context, identifying potentially undervalued stocks becomes crucial for investors looking to capitalize on market inefficiencies, especially as economic conditions fluctuate and currency movements impact valuations.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Akatsuki (TSE:3932)	¥1977.00	¥3641.23	45.7%
Hagiwara Electric Holdings (TSE:7467)	¥3320.00	¥6610.13	49.8%
Avant Group (TSE:3836)	¥2164.00	¥3968.24	45.5%
Pilot (TSE:7846)	¥4687.00	¥8943.17	47.6%
Forum Engineering (TSE:7088)	¥868.00	¥1603.36	45.9%
Adventure (TSE:6030)	¥3710.00	¥7296.71	49.2%
KeePer Technical Laboratory (TSE:6036)	¥4105.00	¥7853.94	47.7%
BayCurrent Consulting (TSE:6532)	¥4961.00	¥9298.26	46.6%
BuySell TechnologiesLtd (TSE:7685)	¥4280.00	¥7997.01	46.5%
Mercari (TSE:4385)	¥2120.00	¥4192.52	49.4%

Click here to see the full list of 82 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's uncover some gems from our specialized screener.

SHIFT (TSE:3697)

Overview: SHIFT Inc. offers software quality assurance and testing solutions in Japan, with a market cap of ¥258.20 billion.

Operations: SHIFT Inc.'s revenue primarily comes from Software Testing Related Services, amounting to ¥71.34 billion, and Software Development Related Services, contributing ¥35.01 billion.

Estimated Discount To Fair Value: 37.8%

SHIFT is trading at ¥14,665, significantly below its estimated fair value of ¥23,559.45. The company's earnings are forecast to grow 33.5% annually, outpacing the Japanese market's 8.7%. Despite recent share price volatility, SHIFT has announced a ¥1 billion share buyback program to enhance corporate value and shareholder returns. With revenue growth expected at 19.3% per year and a high forecasted return on equity of 25.6%, SHIFT presents an opportunity based on cash flow valuation metrics in Japan.

• Our earnings growth report unveils the potential for significant increases in SHIFT's future results.
• Get an in-depth perspective on SHIFT's balance sheet by reading our health report here.

Topcon (TSE:7732)

Overview: Topcon Corporation, with a market cap of ¥162.76 billion, develops, manufactures, and sells positioning, eye care, and smart infrastructure products both in Japan and internationally.

Operations: Revenue segments for the company include ¥67.89 billion from the Eye Care Business and ¥148.60 billion from the Positioning Business.

Estimated Discount To Fair Value: 17.7%

Topcon is trading at ¥1,544, below its estimated fair value of ¥1,875.37. Earnings are expected to grow 24.8% annually, surpassing the Japanese market's 8.7%. Despite low return on equity forecasts and profit margins declining from 4% to 1.9%, revenue growth is projected at 5.4%, outpacing the market's 4.2%. Recent strategic collaborations in healthcare may enhance future cash flows despite current dividends not being well covered by earnings or free cash flows.

• The growth report we've compiled suggests that Topcon's future prospects could be on the up.
• Click here and access our complete balance sheet health report to understand the dynamics of Topcon.

Nissha (TSE:7915)

Overview: Nissha Co., Ltd. operates in industrial materials, devices, medical technologies, information and communication, and pharmaceutical and cosmetics sectors both in Japan and internationally, with a market cap of ¥86.44 billion.

Operations: The company's revenue segments are comprised of ¥72.03 billion from Industrial Materials, ¥63.30 billion from Devices, and ¥40.72 billion from Medical Technology.

Estimated Discount To Fair Value: 18.1%

Nissha is trading at ¥1,798, below its estimated fair value of ¥2,196.63, offering good relative value compared to peers. Earnings are forecast to grow significantly at 30.23% annually over the next three years, outpacing the Japanese market's growth rate. However, profit margins have decreased from 1.6% to 0.3%, and return on equity is projected low at 6.6%. The company recently completed a share buyback worth ¥999.94 million to enhance shareholder returns and capital efficiency.

• The analysis detailed in our Nissha growth report hints at robust future financial performance.
• Click to explore a detailed breakdown of our findings in Nissha's balance sheet health report.

Taking Advantage

• Reveal the 82 hidden gems among our Undervalued Japanese Stocks Based On Cash Flows screener with a single click here.
• Already own these companies? Bring clarity to your investment decisions by linking up your portfolio with Simply Wall St, where you can monitor all the vital signs of your stocks effortlessly.
• Invest smarter with the free Simply Wall St app providing detailed insights into every stock market around the globe.

Interested In Other Possibilities?

• 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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