When looking for Japanese stocks to buy now, we look for high-quality firms that are under-researched and undervalued, where through our engagement we feel we can unlock significant value. We want to be constructive partners, sharing ideas with management on how to rectify the share-price undervaluation. In our view, low valuations, growing shareholder value and engagement are a powerful combination for generating high returns.
Stocks to buy now for growth
With a market share of almost 60%, Wacom (Tokyo: 6727) is a global leader in digital pens and related computing devices. It is benefiting from the growing adoption of digital drawing and writing. Wacom’s dominant position allows it to be at the forefront of technological innovation, developing solutions that utilise big data, artificial intelligence and virtual reality. Its leading technology is used in Samsung devices: the Galaxy S22 Ultra, launched at the start of 2022, boasts an embedded Wacom pen.
Investors underappreciate the growth potential of Wacom’s technology, but we think that will soon change. We have built a good rapport with management and under the leadership of CEO Nobutaka Ide, Wacom has improved its communication with investors and grown its operating earnings by an annualised 39% since 2018. This growth earns the company a place on our list of the best stocks to buy now.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Global flavour and fragrance
T Hasegawa (Tokyo: 4958) is a top-ten global flavour and fragrance (F&F) company. The investment merits of F&F companies are not lost on international investors, with the group’s global peers trading on an average EV/Ebitda multiple of 22 compared with T Hasegawa’s 11. T Hasegawa’s comparatively low EV/Ebitda does not reflect the quality of the business and offers an attractive opportunity in a rapidly growing industry characterised by high customer retention, strong barriers to entry and pricing power.
T Hasegawa has responded positively to our suggestions, and we are excited about the changes under way. The firm has established a new overseas investor relations team and brought in dynamism and fresh perspectives with new appointments. Led by a Western-leaning president intent on changing the conservative managerial culture, T Hasegawa is set for bold new growth.
Cashing in on carrying chips
Shin-Etsu Polymer (Tokyo: 7970) is a listed subsidiary of Shin-Etsu Chemical. It focuses on PVC and silicone-rubber processing. Driven by successful price increases and strong volume growth in its division producing wafer carrier cases (used for storing semiconductor wafers), Shin-Etsu Polymer grew sales and operating profits by an annual 20% and 55% respectively over the last quarter, with a five-year annual operating-earnings growth rate of 12%.
On an EV/EBIT ratio of just 5.7, the stock is a good opportunity to generate attractive returns from a high-quality, growing business – not to mention the prospect of a buyout by its parent company, Shin-Etsu Chemical. That's why we rate it one of the best stocks to buy now in Japan.
-
Shein shifts IPO focus to Hong KongThe development piles fresh pressure on London’s beleaguered stock market, which many had hoped would be boosted by Shein’s IPO
-
Scientists turn lead into gold – could it wreck the yellow metal's price?Medieval alchemists have been vindicated after scientists turned lead into gold, but the results aren’t going to crash the gold price any time soon
-
Where to invest in the metals that will engineer the energy transitionA professional investor tells us where he’d put his money. This week: John Ciampaglia, manager of the Sprott Energy Transition Materials UCITS ETF.
-
Tap into the key long-term growth trends with these resilient performersA professional investor tells us where he’d put his money. This week: Zehrid Osmani, portfolio manager, Martin Currie Global Portfolio Trust, picks three favourites.
-
Look beyond familiar stockmarkets for reliable returns in rough timesTips A professional investor tells us where he’d put his money. This week: Giles Parkinson, managing director of global funds at Close Brothers Asset Management.
-
Look beyond the blue chips for the best bargains in British income stocksTips A professional investor tells us where he’d put his money. This week: Chris McVeyof the FP Octopus UK Multi Cap Income Fund highlights three favourites.
-
Three British stocks offering all-weather incomeTips A professional investor tells us where he’d put his money. This week: Brendan Gulston, co-manager of the LF Gresham House UK Multi Cap Income Fund.
-
Power your portfolio with the profits of China’s electric-vehicle makersOpinion A professional investor tells us where he’d put his money. This week: Ewan Markson-Brown of the CRUX Asia ex-Japan Fund highlights three favourites.
-
Incredible India: the world’s biggest democracy is set for decades of growthOpinion A professional investor tells us where he would put his money. This week: Gaurav Narain, manager of the India Capital Growth Fund, selects three favourites.
-
Profit from the rise of shareholder activism in Japan’s small companiesTips A professional investor tells us where he’d put his money. Daniel Lee, head ofJapan Research, AVI Japan Opportunity Trust, highlights three promising stocks.
