Three Undiscovered Gems in Japan to Enhance Your Investment Portfolio

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As Japan's stock markets show mixed performance, with the Nikkei 225 Index gaining 0.5% and the broader TOPIX Index down 1.0%, investors are closely watching for opportunities amid currency fluctuations and economic adjustments. Amid this backdrop, identifying stocks that offer potential for growth while navigating these market dynamics is crucial for enhancing your investment portfolio. In this article, we explore three undiscovered gems in Japan that stand out due to their resilience and potential in the current economic climate.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name

Debt To Equity

Revenue Growth

Earnings Growth

Health Rating

Central Forest Group

NA

7.05%

14.29%

★★★★★★

Totech

16.86%

5.13%

11.52%

★★★★★★

Techno Quartz

18.64%

16.15%

22.17%

★★★★★★

Soliton Systems K.K

0.58%

5.04%

16.76%

★★★★★★

Kondotec

11.75%

6.85%

2.62%

★★★★★☆

Techno Ryowa

1.77%

2.06%

5.32%

★★★★★☆

Marusan Securities

5.33%

1.01%

10.00%

★★★★★☆

MIRARTH HOLDINGSInc

266.33%

3.00%

-2.40%

★★★★☆☆

Toyo Kanetsu K.K

47.92%

2.34%

15.44%

★★★★☆☆

Yukiguni Maitake

170.63%

-6.51%

-39.66%

★★★★☆☆

Click here to see the full list of 703 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

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

Sumitomo DensetsuLtd

Simply Wall St Value Rating: ★★★★★★

Overview: Sumitomo Densetsu Co., Ltd., along with its subsidiaries, operates as a construction company in Japan and several Southeast Asian countries, with a market cap of ¥141.24 billion.

Operations: Sumitomo Densetsu Ltd. generates revenue primarily from its Utilities Engineering Service segment, which accounted for ¥182.44 billion. The company's market cap stands at ¥141.24 billion.

Sumitomo Densetsu, a lesser-known Japanese construction firm, boasts a P/E ratio of 12.8x, which is below the JP market average of 13.2x. The company's earnings grew by 33.5% over the past year, surpassing the industry growth rate of 26.6%. Over five years, its debt-to-equity ratio improved from 3.8% to 2%, indicating better financial health. Despite recent investor activism attempts being rejected in June 2024, Sumitomo Densetsu remains profitable and free cash flow positive.

TSE:1949 Earnings and Revenue Growth as at Sep 2024
TSE:1949 Earnings and Revenue Growth as at Sep 2024

Tsuburaya Fields Holdings

Simply Wall St Value Rating: ★★★★★★

Overview: Tsuburaya Fields Holdings Inc. operates in content-related businesses in Japan and has a market cap of ¥139.34 billion.

Operations: The company generates revenue primarily from its PS Business Segment (¥120.91 billion) and Content & Digital Business Segment (¥15.80 billion).