In this article, we will take a look at the 12 Best Japanese Stocks To Buy in 2025.
As the dangers of natural disasters increase and the expenses of social security continue to rise, the International Monetary Fund says Japan has to take quick action to strengthen its fiscal situation. The IMF’s warning comes as Japan increases spending to meet a wide range of requirements, from initiatives to improve the birth rate to strengthening national security. This occurs concurrently with its borrowing costs gradually increasing due to rate rises by the Bank of Japan in the past year. Japan already has the highest amount of public debt of any major country. According to a Finance Ministry estimate released this January, the nation’s debt payment expenses are expected to increase by 25% by fiscal year 2028 compared to the previous year, assuming a 3% annual economic growth rate and 2% inflation. Overall, the IMF forecasts that Japan’s public debt will be 232.7% of GDP this year. In addition, at its January 24 meeting, the Bank of Japan voted to boost interest rates to 0.50%, the highest level in seventeen years. The current approach comes after decades of the BOJ’s efforts to normalize interest rates. Despite the increasing balance sheet risk, the bank may be pushed to hike interest rates further if it observes a “virtuous cycle” of rising prices and rising wages, with board member Naoki Tamura stating that raising short-term interest rates to “at least around 1%” by the second half of fiscal year 2025 is “necessary”.
According to a Statistics Bureau of Japan estimate, average household expenditure in Japan in December was 352,633 yen ($2,332), up 7% in nominal terms from the previous year. In addition, Reuters revealed that Japanese household spending rose year-over-year in December 2024 for the first time in five months, and at a far faster rate than expected. However, the Japanese government notes that it was premature to call a bottoming out in the decreasing trend in consumption. Consumer expenditure also grew 2.7% in the same month compared to the previous year, above the median market forecast of 0.5% growth.
Japan-U.S. Summit Meeting
The current environment around Japanese markets is one of concern and relief, especially after U.S. President Donald Trump announced tariffs on steel and aluminum imports. Trump’s threats to impose retaliatory tariffs on “everyone” have served as a harsh reminder of the dangers that all of America’s trading partners, including Japan, face. With Trump aiming to reduce his country’s trade imbalance with Japan, Japanese Prime Minister Shigeru Ishiba pledged to purchase more American LNG and disclosed plans for manufacturers such as Toyota and Isuzu Motors to invest more in the United States at their summit meeting on February 7. Homin Lee, senior macro strategist at Lombard Odier in Singapore, had the following to say about the meeting:
“The friendly tone and substance of the summit, especially in regard to Japan’s high profile investment in the U.S. steel sector, should provide a modest relief to Japanese investors.”
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Our Methodology
For this list, we compiled a list of US-listed Japanese stocks using stock screeners. We then chose the best Japanese stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 900 elite hedge funds tracked as of the end of the third quarter of 2024. The list is arranged in ascending order of the number of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12. Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF)
Number of Hedge Fund Holders: 1
Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF) is a retail and wholesale firm that specializes in Japanese beauty, health, luxury, and technology items, with locations in Hong Kong, Japan, North America, and the United Kingdom.
According to Tokyo Lifestyle’s most recent financial results for the first half of fiscal year 2025, revenues rose by 32.1% to $98 million, while income from operations increased by a notable 867.8%. The figures highlight the significant contributions made by franchise sites and wholesale clients, whose revenue climbed by 53.8% to $86.9 million. That said, the company had to contend with a drop in revenues from its directly operated physical and online stores. On the other hand, the company displayed great cost management by cutting operating expenditures by 2.2% despite a 32.7% increase in revenue costs.
According to Insider Monkey’s third-quarter database, 1 hedge fund was positive on Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF).
11. TOYO Co., Ltd. (NASDAQ:TOYO)
Number of Hedge Fund Holders: 1
TOYO Co., Ltd. (NASDAQ:TOYO) engages in the design, manufacture, and sales of solar cells and modules. The company is known for integrating the upstream manufacturing of wafers and silicon, the midstream manufacture of solar cells, and the downstream production of photovoltaic (PV) modules.
In late 2024, TOYO Co., Ltd. (NASDAQ:TOYO) stated that it had struck a $150 million agreement to supply high-efficiency solar cells to a prominent solar module manufacturer. According to the agreement, TOYO will offer cutting-edge solar cells to assist the customer’s expanding solar module production in the United States and India.
A day earlier, the company announced an agreement to acquire all membership interests in Houston-based Solar Plus Technology Texas LLC. The facility is expected to begin producing 1 GW by the middle of 2025. Production capacity is expected to increase to 2.5 GW by the end of 2025 in anticipation of a strong order backlog from U.S. clients.
According to Insider Monkey’s Q3 database, 1 hedge fund was positive on TOYO Co., Ltd. (NASDAQ:TOYO).