Undiscovered Gems In Japan Featuring Tsurumi ManufacturingLtd And Two More Small Caps

Amid the recent modest gains in Japan's stock markets, with the Nikkei 225 Index rising 0.8% and the broader TOPIX Index up 0.2%, investors are increasingly eyeing small-cap stocks for potential opportunities. As global markets react to monetary policy shifts and economic indicators, identifying companies with strong fundamentals becomes crucial. In this article, we explore three small-cap stocks in Japan that stand out as undiscovered gems, starting with Tsurumi Manufacturing Ltd.

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%	★★★★★★
Nihon Parkerizing	0.31%	0.86%	4.40%	★★★★★★
QuickLtd	0.73%	9.61%	14.56%	★★★★★★
NJS	NA	4.97%	5.30%	★★★★★★
Ad-Sol Nissin	NA	4.02%	7.90%	★★★★★★
Otec	9.81%	2.32%	-1.39%	★★★★★★
Techno Smart	NA	6.07%	-0.57%	★★★★★★
Kondotec	11.75%	6.85%	2.62%	★★★★★☆
AJIS	0.69%	0.07%	-12.44%	★★★★★☆
Nippon Ski Resort DevelopmentLtd	39.31%	2.95%	19.16%	★★★★★☆

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

Here we highlight a subset of our preferred stocks from the screener.

Tsurumi ManufacturingLtd (TSE:6351)

Simply Wall St Value Rating: ★★★★★☆

Overview: Tsurumi Manufacturing Co., Ltd. specializes in the production, purchase, import, export, sale, and leasing of submersible pumps and peripheral equipment on a global scale with a market cap of ¥90.08 billion.

Operations: Tsurumi Manufacturing Co., Ltd. generates revenue primarily from the production, purchase, import, export, sale, and leasing of submersible pumps and peripheral equipment. The company operates on a global scale with a market capitalization of ¥90.08 billion.

Tsurumi Manufacturing, a smaller player in the machinery sector, has shown robust performance with earnings growth of 13.5% over the past year, outpacing the industry’s 13.1%. The company repurchased 100,000 shares for ¥381 million recently. Its debt to equity ratio rose from 2.5% to 10.5% over five years but remains manageable with more cash than total debt and positive free cash flow. Trading at 32% below estimated fair value suggests potential upside for investors.

• Navigate through the intricacies of Tsurumi ManufacturingLtd with our comprehensive health report here.

• Learn about Tsurumi ManufacturingLtd's historical performance.

Nippon Avionics (TSE:6946)

Simply Wall St Value Rating: ★★★★★☆

Overview: Nippon Avionics Co., Ltd. manufactures and sells micro joining equipment in Japan, with a market cap of ¥40.70 billion.

Operations: Nippon Avionics generates revenue primarily from its Information Systems segment, which accounts for ¥15.05 billion, and its Electronic Systems segment, including infrared rays and measurement equipment, contributing ¥3.48 billion.

Nippon Avionics, a niche player in the electronics sector, has shown promising financial health with its debt to equity ratio decreasing from 60.9% to 33.3% over five years and a net debt to equity ratio at 12.3%. The company’s EBIT covers interest payments 71.9 times, indicating solid financial management. Recent earnings growth of 10.3% outpaced the industry average of 7.8%, and they forecast an annual growth rate of 8.3%. Additionally, Nippon Avionics repurchased approximately ¥1,990 million worth of shares recently, reflecting confidence in their own stock value.

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

• Explore historical data to track Nippon Avionics' performance over time in our Past section.

Integrated Design & Engineering HoldingsLtd (TSE:9161)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Integrated Design & Engineering Holdings Co., Ltd. (TSE:9161) offers engineering consultation, power engineering, and various other services both in Japan and internationally, with a market cap of ¥59.23 billion.

Operations: The company generates revenue primarily from consulting (¥85.90 billion), urban & spatial development (¥44.86 billion), and energy services (¥28.85 billion).

Integrated Design & Engineering Holdings Ltd. has shown impressive growth, with earnings surging by 212.9% over the past year, outpacing the Construction industry’s 21.2%. The company’s net debt to equity ratio stands at a satisfactory 16.1%, and its price-to-earnings ratio of 6.3x is notably below the JP market average of 13.4x, indicating potential undervaluation. Recent announcements include a dividend of JPY 175 per share and projected revenue for FY2025 at JPY 165 billion with an operating profit of JPY 12.2 billion.

• Dive into the specifics of Integrated Design & Engineering HoldingsLtd here with our thorough health report.

• Review our historical performance report to gain insights into Integrated Design & Engineering HoldingsLtd's's past performance.

Where To Now?

• Unlock our comprehensive list of 754 Japanese Undiscovered Gems With Strong Fundamentals by clicking here.
• 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.
• Discover a world of investment opportunities with Simply Wall St's free app and access unparalleled stock analysis across all markets.

Searching for a Fresh Perspective?

• 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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