Discovering Japan's Undiscovered Gems In October 2024

As Japan's stock markets face downward pressure amid election uncertainty and a weakening yen, investors are increasingly looking for opportunities in the small-cap sector that might be overlooked by broader market trends. In this environment, identifying stocks with strong fundamentals and potential for growth can be crucial for navigating the complexities of the current economic landscape.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Toho	69.52%	2.84%	55.65%	★★★★★★
Central Forest Group	NA	7.05%	14.29%	★★★★★★
Ohashi Technica	NA	1.57%	-20.55%	★★★★★★
Ad-Sol Nissin	NA	4.02%	7.90%	★★★★★★
Maezawa Kasei Industries	0.81%	2.01%	18.42%	★★★★★★
Nikko	31.99%	4.24%	-8.75%	★★★★★☆
GakkyushaLtd	23.64%	5.03%	18.56%	★★★★☆☆
Toyo Kanetsu K.K	47.92%	2.34%	15.44%	★★★★☆☆
Ogaki Kyoritsu Bank	139.93%	2.20%	-0.27%	★★★★☆☆
Nippon Sharyo	61.34%	-1.68%	-17.07%	★★★★☆☆

Click here to see the full list of 719 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

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

Kokuyo (TSE:7984)

Simply Wall St Value Rating: ★★★★★★

Overview: Kokuyo Co., Ltd. is a Japanese company engaged in the manufacturing, purchasing, and selling of stationery and office furniture products, with a market capitalization of ¥300.34 billion.

Operations: Kokuyo generates revenue primarily from its Work Style Area - Furniture Business and Business Supply Distribution Business, with contributions of ¥157.32 billion and ¥98.41 billion, respectively. The Lifestyle Area - Stationery Business also adds significantly to the company's revenue at ¥84.87 billion.

Kokuyo, a notable player in Japan's commercial services sector, has shown promising financial health with earnings growth of 19% over the past year, outpacing the industry average of 5.9%. The company seems to have managed its debt well, reducing its debt-to-equity ratio from 6.5 to 1.8 over five years while maintaining more cash than total debt. A significant ¥6.8 billion one-off gain influenced recent results, indicating potential volatility but also highlighting high-quality earnings. Trading at a discount of 20% below estimated fair value suggests Kokuyo may offer attractive opportunities for investors seeking undervalued stocks in Japan.

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

• Examine Kokuyo's past performance report to understand how it has performed in the past.

Senshu Ikeda Holdings (TSE:8714)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Senshu Ikeda Holdings, Inc. offers banking products and services to small and medium-sized enterprises as well as individuals in Japan and internationally, with a market cap of ¥95.62 billion.

Operations: Senshu Ikeda Holdings generates revenue primarily through its banking services targeted at small and medium-sized enterprises and individual clients in Japan and internationally. The company has a market capitalization of ¥95.62 billion.

With total assets of ¥6,446.4 billion and equity standing at ¥243.7 billion, Senshu Ikeda Holdings showcases a robust financial foundation. The bank's deposits amount to ¥5,734.9 billion while loans reach ¥4,654.5 billion; however, the allowance for bad loans is insufficient at 1.1% of total loans. Impressively, earnings surged by 30% over the past year, outpacing the industry average of 19%. Primarily funded through low-risk customer deposits comprising 92% of liabilities, this strategy seems to bolster stability in its operations despite challenges with loan allowances and net interest margins at just 0.8%.

• Navigate through the intricacies of Senshu Ikeda Holdings with our comprehensive health report here.

• Explore historical data to track Senshu Ikeda Holdings' performance over time in our Past section.

NIKKON HoldingsLtd (TSE:9072)

Simply Wall St Value Rating: ★★★★★☆

Overview: NIKKON Holdings Co., Ltd. operates in the cargo transportation sector both within Japan and internationally, with a market capitalization of ¥239.94 billion.

Operations: NIKKON Holdings Co., Ltd.'s revenue is primarily derived from its cargo transportation business. The company has a market capitalization of ¥239.94 billion, reflecting its significant presence in the sector.

NIKKON Holdings, a relatively small player in Japan's transportation sector, presents an intriguing investment case. The company has been trading at 15.6% below its estimated fair value, indicating potential undervaluation. Over the past five years, earnings have grown by 1.3% annually; however, they lagged behind the industry average of 20.7%. On the financial front, NIKKON maintains a satisfactory net debt to equity ratio of 22.8%, suggesting prudent leverage management. Recent strategic moves include repurchasing 816,400 shares for ¥2,999 million and reducing dividends to ¥27 per share from last year's ¥55 per share payout.

• Dive into the specifics of NIKKON HoldingsLtd here with our thorough health report.

• Evaluate NIKKON HoldingsLtd's historical performance by accessing our past performance report.

Seize The Opportunity

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Ready To Venture Into Other Investment Styles?

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• 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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