Japanese Yen Puts Sony Corporation (ADR) (SNE) at an Advantage Over Microsoft Corporation (MSFT)

Going forward analysts on a consensus basis anticipate Sony Corporation (ADR) (NYSE:SNE) to grow earnings by 54.3% on average over the next five years. This is driven by growth in smart phones, tablets, currency devaluation, and cost cutting.

Comparatively Microsoft Corporation (NASDAQ:MSFT) reported a 56% growth rate in its entertainment and devices division in the most recent quarter. The company’s growth in Windows Phone 8 licenses was driven by its partnership with Nokia Corporation (ADR) (NYSE:NOK). Nokia has lost a lot of smart phone market share but with Nokia Corporation (ADR) (NYSE:NOK) using the Windows Phone 8 operating system, maybe it can hold on, and fight back against the iOS and Android ecosystems.

Japanese financials

Nomura Holdings, Inc. (ADR) (NYSE:NMR) is a financial institution that investors have to watch out for. The company recently saw an acceleration in growth, in the first quarter of 2013, which is the fourth quarter for Nomura Holdings, Inc. (ADR) (NYSE:NMR). The company’s fiscal year ends on March 31.

The company saw 14% year-over-year growth in revenue for its 2013 fiscal year. The company also reported 320% year-over-year growth in income before income taxes. The company has been able to grow earnings significantly because of some modest cost cutting, currency effects, and some organic growth in its core businesses.

Going forward analysts on a consensus basis anticipate the company to grow earnings by 700% in the 2014 fiscal year, and 28.10% in the 2015 fiscal year (both end on March 31st). The company’s growth is staggering, and at just a 25.6 earnings multiple, Nomura Holdings, Inc. (ADR) (NYSE:NMR) is extremely tempting. The company also compensates its investors with a 1.15% dividend yield.

Conclusion

I believe that investors should position themselves long in Japanese equities. The economy is likely to recover, and while the third arrow of Abenomics fell short of immigration reform and corporate tax cuts. The economy will be on stable footing due to stimulus spending, reform in other aspects of the economy, and an asset purchase program at an unprecedented scale by the Bank of Japan.

Investors should buy the dollar-yen currency pair on the dip, and accumulate over time. I also find both Sony Corporation (ADR) (NYSE:SNE) and Nomura Holdings, Inc. (ADR) (NYSE:NMR) lucrative and compelling investment opportunities for those who are willing to take the risk. Sony Corporation (ADR) (NYSE:SNE) will grow earnings faster than Microsoft Corporation (NASDAQ:MSFT). If an investor wants diversification, then an investor should consider buying the iShares MSCI Japan Index Fund.

Alexander Cho has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft Corporation (NASDAQ:MSFT).

The article Japanese Yen Puts Sony at an Advantage Over Microsoft originally appeared on Fool.com.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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