In this article, we discuss the 10 best Japanese stocks to buy right now.
Originating from the third largest economy in the world, Japanese companies are some of the leading contributors to world GDP. Even though the COVID-19 pandemic slowed the economic momentum of an export-reliant Japan due to broken global supply chains, the Japanese stocks are slowly recovering after the impressive vaccine rollout in Japan and other major countries.
The COVID-19 pressures delayed Japan’s economic recovery even heading into Q3 2021, but as of November this year, Japan’s vaccination rates have reached 75% of the population, and all restrictions on the economy have finally been lifted, which means that better days are ahead for Japanese companies, at least in the short-term.
Japan’s Economic Outlook
The Q3 annualized GDP for Japan fell by 3%, as compared to a forecasted decline of 0.8%. Consumption fell 1.1% in July-September, and domestic demand was responsible for a 0.9% drop in GDP. In the current quarter, consumer activity is picking up, and auto output is improving, so analysts expect Japan’s economy to expand an annualized 5.1%.
The Japanese government has planned to implement a stimulus package worth trillions of yens, prioritizing the chip industry and the country’s digital growth, yet market researchers believe that the package will help in the medium- to long-term, rather than relieve immediate economic pressure.
Japan lost 2.1% of its exports in July-September as trade was impacted by chip shortages and supply chain constraints. Real GDP is not expected to reach pre-pandemic levels until the second half of 2023, and the stimulus package will result in a 1% to 2% growth in the Japanese economy after Q2 2022, since exports remain uncertain.
Japanese analysts expect exports to recover largely by the first three months into 2022, and the auto industry is set for recovery since chip manufacturers have expanded production, supply chains are slowly regaining pre-pandemic momentum, and foot traffic has nearly returned to 2019 levels. It is high time to keep an eye out for Japanese stocks, which are surely recovering yet current valuation might offer attractive entry points into these multinational corporations.
The most notable Japanese stocks according to our extensive research include Panasonic Corporation (OTC:PCRFY), Honda Motor Co., Ltd. (NYSE:HMC), Sony Group Corporation (NYSE:SONY), and Toyota Motor Corporation (NYSE:TM), among others discussed in detail below.
Photo by Lenny Kuhne on Unsplash
Our Methodology
With this context in mind, we selected the top Japanese stocks based on mostly positive news surrounding each company, determining their caliber according to analyst ratings, earnings for the period ending September 2021 and long-term growth catalysts. These Japanese stocks are ranked according to their market capitalization.
Best Japanese Stocks to Buy Right Now
10. Nissan Motor Co., Ltd. (OTC:NSANY)
Number of Hedge Fund Holders: N/A
Market Capitalization as of December 1: $19.27 billion
Nissan Motor Co., Ltd. (OTC:NSANY) is a Yokohama-based multinational automobile manufacturer that owns three vehicle brands, namely Nissan, Infiniti, and Datsun. Nissan Motor Co., Ltd. (OTC:NSANY), via the Renault-Nissan-Mitsubishi alliance, is one of the largest automakers in the world, and is competing directly with Tesla, Inc. (NASDAQ:TSLA) on the electric vehicles front, with Nissan LEAF being its top-selling EV. As of December 1, the automaker had a market cap of $19.27 billion.
Goldman Sachs analyst Kota Yuzawa on November 18 upgraded Nissan Motor Co., Ltd. (OTC:NSANY) to Buy from Neutral with a price target of 820 yen, up from 620 yen, which reflects a 31% upside. The analyst stated that Q2 results suggested a “substantial improvement” in the breakeven volume and Nissan Motor Co., Ltd. (OTC:NSANY)’s earnings will likely improve as the company catches up to production early next year.
Nissan Motor Co., Ltd. (OTC:NSANY) announced earnings for the first half of fiscal year 2021, ending March 31 2022. The company reported a net revenue for the period amounting to 3,947 billion yen, and the net income attributable to common shareholders totaled 168.6 billion yen.
Nissan Motor Co., Ltd. (OTC:NSANY) is planning to invest $17.6 billion over the next five years in its EV division, and will introduce 15 new EV models by FY2030. By 2030, Nissan Motor Co., Ltd. (OTC:NSANY) expects that half of its vehicles sold will be powered at least partly by batteries.
In addition to Panasonic Corporation (OTC:PCRFY), Honda Motor Co., Ltd. (NYSE:HMC), Sony Group Corporation (NYSE:SONY), and Toyota Motor Corporation (NYSE:TM), Nissan Motor Co., Ltd. (OTC:NSANY) is a notable Japanese stock.
9. Panasonic Corporation (OTC:PCRFY)
Number of Hedge Fund Holders: N/A
Market Capitalization as of December 1: $25.99 billion
Panasonic Corporation (OTC:PCRFF) is one of the key Japanese multinational conglomerates, and offers consumer electronics, rechargeable batteries, automotive and avionic systems, and industrial systems. Panasonic Corporation (OTC:PCRFF) is also actively exploring artificial intelligence, robotics, and the internet of things to offer advanced products and services, and stay on top of the competition. Mizuho analyst Yasuo Nakane upgraded Panasonic Corporation (OTC:PCRFF) on October 8 to Buy from Neutral with a 1,700 yen price target.
It was revealed in an October 1 report that Panasonic Corporation (OTC:PCRFF) would alter its corporate structure by April 2022, which would help navigate and lessen the conglomerate discount associated with the stock. Panasonic Corporation (OTC:PCRFF) is one of the best Japanese stocks to buy now, since another positive catalyst for Panasonic Corporation (OTC:PCRFF) is the upward revision of the FY2022 operating profit guidance, in light of the Q1 FY 2022 operating income outperforming expectations.
Panasonic Corporation (OTC:PCRFF) posted its financial results for September end on October 28. The GAAP EPS amounted to $0.29, beating estimates by $0.02.
8. Mitsubishi Electric Corporation (OTC:MIELY)
Number of Hedge Fund Holders: N/A
Market Capitalization as of December 1: $26.65 billion
Mitsubishi Electric Corporation (OTC:MIELY) is a Japanese multinational electronics and electrical equipment manufacturing company from Tokyo. Mitsubishi Electric Corporation (OTC:MIELY) is an integral part of the Mitsubishi Corporation (OTC:MSBHF), and offers a product portfolio including luxury home appliances, air conditioning, factory automation systems, train systems, electric motors, semiconductors, and satellites, among others.
Mitsubishi Electric Corporation (OTC:MIELY) announced a ¥14 per share interim dividend on September 22, and stated that the actual dividend will be declared at the board meeting when financial results for Q2 FY2022 will be approved.
The company reported 1H results on October 28, and the net profit came in at ¥104.8 billion, whereas revenue for the period was ¥2138.3 billion, up 12% year-over-year.
Mitsubishi Electric Corporation (OTC:MIELY) is a leading force in research and development, having won a total of 27 R&D 100 Awards from the U.S. publication R&D World, making it one of the best Japanese stocks to purchase. It was revealed on December 1 that Mitsubishi Electric Corporation (OTC:MIELY) has won another R&D 100 Award in 2021 for its low-voltage air circuit breaker, which is a switching device that protects low-voltage power-distribution systems in factories and buildings.
7. Mizuho Financial Group, Inc. (NYSE:MFG)
Number of Hedge Fund Holders: 6
Market Capitalization as of December 1: $31.75 billion
Mizuho Financial Group, Inc. (NYSE:MFG) is a Tokyo-based bank holding company operating via its primary subsidiary, Mizuho Bank. The financial services offered by Mizuho Financial Group, Inc. (NYSE:MFG) include consumer banking, corporate banking, investment banking, global wealth management, financial analysis, and private equity.
As the economy recovers from the COVID-19 pandemic, Mizuho Financial Group, Inc. (NYSE:MFG), which is one of the largest Japanese lenders, reported that earnings rose 79% to 385.7 billion yen, making Mizuho Financial Group, Inc. (NYSE:MFG) one of the best Japanese stocks according to our research.
The Q2 2022 earnings were announced on November 12 by Mizuho Financial Group, Inc. (NYSE:MFG), with the GAAP EPS amounting to $0.09, beating estimates by $0.01. The $5.11 billion revenue outperformed estimated revenue by $336.76 million.
Jim Simons’ Renaissance Technologies is the largest stakeholder of Mizuho Financial Group, Inc. (NYSE:MFG), holding 2.87 million shares worth $8.15 million. Overall, 6 hedge funds in the Q3 database of Insider Monkey reported owning stakes in Mizuho Financial Group, Inc. (NYSE:MFG), amounting to $13.1 million.
6. Mitsubishi Corporation (OTC:MSBHF)
Number of Hedge Fund Holders: N/A
Market Capitalization as of December 1: $44.43 billion
Mitsubishi Corporation (OTC:MSBHF) is the largest trading Japanese company, and operates in multiple sectors via its subsidiaries, including finance, banking, energy, machinery, chemicals, and food. Mizuho analyst Kanako Mizuno upgraded Mitsubishi Corporation (OTC:MSBHF) to Buy from Neutral with a 4,200 yen price target on September 8.
Mitsubishi Corporation (OTC:MSBHF)’s consolidated forecasts for the year ending March 2022 reflect that profit attributable to common shareholders will be 380 billion yen, gaining 120.2% year-over-year. An annual cash dividend of 142 yen per share is also forecasted for the period.
Mitsubishi Corporation (OTC:MSBHF), as one of the largest Japanese companies, is playing its role in revolutionizing the country’s shift to EVs. It was reported on November 27 that Mitsubishi Corporation (OTC:MSBHF) will partner with the UK energy management solutions firm, Kaluza, and use the synergies created from Kaluza’s intelligent energy platform and Mitsubishi Corporation (OTC:MSBHF)’s industry experience to support utilities, auto manufacturers, and consumers in the shift to EVs in Japan.
In addition to Panasonic Corporation (OTC:PCRFY), Honda Motor Co., Ltd. (NYSE:HMC), Sony Group Corporation (NYSE:SONY), and Toyota Motor Corporation (NYSE:TM), Mitsubishi Corporation (OTC:MSBHF) is a notable Japanese stock.
5. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG)
Number of Hedge Fund Holders: 11
Market Capitalization as of December 1: $44.91 billion
Incorporated in 2002, and headquartered in Tokyo, Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG), via its subsidiaries, offers commercial banking, leasing, securities, consumer finance, and other related financial services in Japan, the Americas, Europe, the Middle East, Asia, and Oceania. Cowen Group’s Ramius is the leading stakeholder of Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) from the 11 hedge funds that were bullish on the company as of Q3 2021, holding 10.36 million shares worth $72.6 million.
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) is the second largest Japanese bank by total assets, and as the economy recovered from the COVID-19 headwinds and credit costs subsided, Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) reported a 69% jump in profits to $4 billion in the April-September period. Revenue in the period equaled $6.49 billion, outperforming estimates by $378.83 million.
To strengthen its existing business further, and serve clients in a more efficient manner, Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) entered into a strategic alliance with Jefferies Financial Group Inc. (NYSE:JEF) in July, to collaborate on future corporate and investment banking business opportunities. This will allow both organizations to experience growth and explore a broader clientele.
4. Honda Motor Co., Ltd. (NYSE:HMC)
Number of Hedge Fund Holders: 12
Market Capitalization as of December 1: $47.98 billion
Honda Motor Co., Ltd. (NYSE:HMC), one of the best and most well known Japanese companies, is a multinational Tokyo-based conglomerate, manufacturing automobiles, motorcycles, and power equipment. Honda Motor Co., Ltd. (NYSE:HMC) directly competes with Toyota Motor Corporation (NYSE:TM), and its vehicles are sold worldwide.
As of Q3 2021, 12 hedge funds in the database of Insider Monkey were long Honda Motor Co., Ltd. (NYSE:HMC), with total stakes amounting to $338.6 million. This is compared to 10 funds being bullish on the stock in the preceding quarter, with a stake value of almost $375 million. Ken Fisher’s Fisher Asset Management is the leading Honda Motor Co., Ltd. (NYSE:HMC) stakeholder, holding a $242.75 million position in the company.
Morgan Stanley analyst Shinji Kakiuchi on October 12 initiated coverage of Honda Motor Co., Ltd. (NYSE:HMC) with an Equal Weight rating and 3,600 yen price target as he started coverage of Japan’s automakers with an In-Line industry view. Honda Motor Co., Ltd. (NYSE:HMC) reported a Q2 FY2022 EPS of $0.88 on November 5, beating analysts’ estimates by $0.14.
The new Honda Motor Co., Ltd. (NYSE:HMC) CEO, Toshihiro Mibe, announced that he wants Honda Motor Co., Ltd. (NYSE:HMC) to go fully-electric by 2040, although several new models launched will actually have a hydrogen fuel cell, not a big battery to store electricity.
Currently, Honda Motor Co., Ltd. (NYSE:HMC) has one EV, which is only available in Europe, and the company has planned to launch 10 new models in the next five years. Mibe suggested that Honda Motor Co., Ltd. (NYSE:HMC) will strengthen its partnership with General Motors Company (NYSE:GM) to serve the North American market and share electrified, electric, or ICE powertrains.
3. Hitachi, Ltd. (OTC:HTHIY)
Number of Hedge Fund Holders: N/A
Market Capitalization as of December 1: $57 billion
Hitachi, Ltd. (OTC:HTHIY) is a Japanese multinational conglomerate that is the parent company of the Hitachi Group, and specializes in information technology, artificial intelligence, internet of things, big data, and infrastructure. Via its subsidiaries, Hitachi, Ltd. (OTC:HTHIY) offers robotics, escalators, electronics, industrial machinery, semiconductors, power plants, auto parts, and defense technology.
According to a December 2 report, Hitachi, Ltd. (OTC:HTHIY) is one of the major players in the escalator market, which is expected to grow by $3.93 billion, at a CAGR of 3.69% from 2021 to 2026.
2. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 19
Market Capitalization as of December 1: $148.96 billion
Sony Group Corporation (NYSE:SONY) is often referred to as Japan’s fairly priced big tech company, and it is also considered to be underrated by some analysts. Sony Group Corporation (NYSE:SONY) is a multinational conglomerate from Tokyo, positioned as one of the major Japanese technology firms. Sony Group Corporation (NYSE:SONY) is one of the largest global manufacturers of consumer electronics and a strong media entertainment company.
Mario Gabelli’s GAMCO Investors is the largest stakeholder of Sony Group Corporation (NYSE:SONY) as of September this year, holding a $209.2 million position in the company. Overall, 19 hedge funds in the Q3 database of Insider Monkey were bullish on Sony Group Corporation (NYSE:SONY), with total stakes amounting to approximately $389 million.
Financial results for the second quarter ended September 30 were announced by Sony Group Corporation (NYSE:SONY) on October 28. Revenue for the period totaled 2369.4 billion yen, gaining 13% year-over-year. The per share net income attributable to common shareholders totaled 170.26 yen, which was down by 196.82 yen as compared to the preceding-year quarter.
Sony Group Corporation (NYSE:SONY) announced on October 6 that it would launch its own Edge AI Platform Service, namely AITRIOS, to develop and implement AI-driven sensing solutions.
Here is what Cooper Investors has to say about Sony Group Corporation (NYSE:SONY) in its Q2 2021 investor letter:
“Firstly gaming, an area that was already growing in global importance before the pandemic but whose development has only accelerated, with the size of the US video game industry eclipsing movies and music combined in 2020. The portfolio has exposure to this area through investments in Sony (Sony Interactive, producer of PlayStation consoles and games).The first half of 2021 has seen deal activity reaching record levels, around US$60bn combining both M&A and public offerings. While some giant ecosystem owners like Microsoft have made large bets (e.g. the March US$7.5bn deal for Zenimax) we prefer the cautious approach of Sony taking several smaller but more strategic investments. Examples include the additional US$200mn participation in Epic Games (creator of the Unreal Engine and Fortnite) in March of this year, or the recent purchase of Finland’s oldest gaming studio, Housemarque. The latter case represents a good example of Sony being both a ‘safe haven’ and a source of scale and support for small but proven studios to retain their culture and grow into potential triple-A game developers over time.”
1. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 10
Market Capitalization as of December 1: $248.76 billion
Toyota Motor Corporation (NYSE:TM) ranks first on our list of the best Japanese stocks to buy now, based on its $248.76 billion market capitalization. Toyota Motor Corporation (NYSE:TM) is a Japanese multinational automaker that is considered to be one of the largest global automobile manufacturers. Toyota Prius was Toyota Motor Corporation (NYSE:TM)’s first contribution to the hybrid EV category in 1997, making it a research, development, and innovation leader in the market. Today, Toyota Motor Corporation (NYSE:TM) produces over 40 models of electric vehicles.
Fisher Asset Management is the leading Toyota Motor Corporation (NYSE:TM) stakeholder, with 4.79 million shares worth $853 million. Of the 867 hedge funds monitored by Insider Monkey as of Q3 2021, 10 funds were bullish on Toyota Motor Corporation (NYSE:TM), with a total stake value of $876.1 million.
Reports on November 4 suggest that sales in the first half of FY2022 were up 36.1% year-over-year at Toyota Motor Corporation (NYSE:TM), and the EPS for the period amounted to 109.28 yen, comparable to the first half of FY2021 EPS of 45.04 yen. Dividends per share were also announced, amounting to 120 yen.
It was revealed by Toyota Motor Corporation (NYSE:TM) on November 12 that the global production plan in December is expected to reach 800,000 units, incorporating the recovery from the impact of the previous production cutbacks. Toyota Motor Corporation (NYSE:TM)’s 14 plants and 28 production lines in Japan will be also be operating normally for the first time in seven months since May.
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Disclosure: None. 11 Best Japanese Stocks To Buy Right Now is originally published on Insider Monkey.
