Long-term growth and innovation in Japan

Professional investor Nicholas Weindling picks three Japanese stocks that should benefit from structural trends that promise long-term sources of return.

A professional investor tells us where he'd put his money. This week: Nicholas Weindling of the JP Morgan Japanese Investment Trust picks three stocks.

The JP Morgan Japanese Investment Trust contains innovative and fast-growing companies. We seek out what we consider to be the best investment ideas in Japan to maximise returns, concentrating on firms with excellent long-term growth prospects that are not dependent on the economic cycle.

We believe that an active style of portfolio management that focuses on stock selection conducted by experienced, locally based investors offers the greatest opportunity to add value. We use extensive bottom-up research to identify undervalued earnings growth. Our approach can be summarised as aiming for growth at a reasonable price. There are several key structural trends that we have identified as promising long-term sources of return. Examples of these themes and stocks are detailed below.

Profiting from ageing

Nihon M&A Center (Tokyo: 2127)

The march of the robots

The robot-usage ratio in emerging countries such as China and India is still extremely low, so there is significant room for growth. Japan has several leading factory automation providers, such as Keyence (Tokyo: 6861), which should benefit from this trend.

Cosmetics are popular in China

Shiseido (Tokyo: 4911)

Asian consumers, especially in China, tend to spend more on skincare products than on fragrances or make-up. Shiseido has a strong presence in high-end skin-care products, so it is very well positioned to benefit from rising Chinese spending power. We bought the stock amid clear signs of turnaround following a takeover by new managers. The profit margin is improving from a low base.

Recommended

HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022
Seize these investment trust bargains in 2022
Investment trusts

Seize these investment trust bargains in 2022

Attractive investment trusts are trading at a discount, and those waiting for the perfect time to buy will miss out. Max King picks a selection of the…
17 Jan 2022
Energy prices will keep rising – here’s how to invest
Energy

Energy prices will keep rising – here’s how to invest

Energy prices will keep rising for the foreseeable future – it is a simple matter of supply and demand. Merryn Somerset Webb explains how you should i…
14 Jan 2022
Share tips of the week – 14 January
Share tips

Share tips of the week – 14 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Jan 2022

Most Popular

Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Tech stocks teeter as US Treasury bond yields rise
Tech stocks

Tech stocks teeter as US Treasury bond yields rise

The realisation that central banks are about to tighten their monetary policies caused a sell-off in the tech-heavy Nasdaq stock index and the biggest…
14 Jan 2022