The Era of 150 Yen to the Dollar Has Arrived! Here are the 30 Japanese Stocks with Resilience Despite the Super Weak Yen
Special demand for the resurgence of explosive buying, stable stocks, and overseas sales ratios...... asked investment professionals.
Can’t move even with leverage – or can’t they? It is hard to say, but before Bank of Japan Governor Haruhiko Kuroda (78) could come up with any drastic measures, the yen plunged to a historic low of 150 yen to the dollar. As the future remains uncertain, the burden on households will only become more difficult as price hikes on food, home appliances, and other items continue unabated.
Challenging stock investments should be avoided during unstable market conditions. We asked investment professionals for stocks that benefit from the yen’s depreciation and have “underlying strength” that will not collapse in earnings over the slightest problem.
The first stocks mentioned are those that are expected to see a recovery in sales due to the resurgence of inbound demand. Now that restrictions on entry into Japan have been eased, foreign tourists are gradually returning to Japan in search of “cheap Nippon.” Economic journalist Hideki Wajima has the following to say.
In the inbound-related sector, some companies have been severely damaged by the COVID-19 crisis, and even if demand revives, they may not be able to go on the offensive due to depletion of funds and manpower. Therefore, companies with capital depth are more likely to be ‘buyers.’ In terms of the resurgence of inbound buying, companies such as Shiseido, with its global brand power in luxury cosmetics, and the Seiko Group, which has been performing well thanks to the popularity of its high-priced wristwatches such as the Grand Seiko, are relatively solid. Also, as is standard with inbound stocks, a recovery in the share price of ANA Holdings, Inc.
Department stores and mass merchandisers, which used to be crowded with foreign visitors to Japan, are also seeing a recovery in sales. Now is the perfect time to stock up on stocks such as Takashimaya, which suffered a major drop in earnings due to the Corona disaster, and Bic Camera, which enjoys strong popularity among Chinese tourists.
Taking advantage of the weak yen, not only goods but also “companies” are being bought by foreigners. In such a situation, businesses related to temporary staffing services are in demand. According to Katsumi Sato, a stock analyst, “The weak yen has allowed Japanese companies to be acquired by foreigners.”
When the yen weakens, it becomes easier to acquire Japanese companies, and managerial-level personnel who can match the needs of foreign companies become more important. JAC Recruitment, a high-class recruitment agency, is one of the few companies that can meet this demand. Conversely, an increasing number of Japanese are looking to earn foreign currency overseas. Companies are also eager to train global human resources. RareJob, the largest online English conversation service, has the advantage of being able to meet the demands of both individuals and corporations.
In addition to the companies that are enjoying the demand from the buyers, companies that can earn foreign currencies locally are also benefiting from the weak yen. In picking out such stocks, the theory is to focus on the “overseas sales ratio. In a time when it is difficult to increase sales solely on domestic demand, investors tend to buy companies that have a high ratio of overseas sales or are trying to increase their ratio.
Seven & i Holdings is the top distributor in Japan, but its overseas convenience store business maintained strong performance in the first half of the year, with operating income roughly doubling from the previous year. It will be interesting to see if its strategy of strengthening private brand products (Seven Premium) to secure sales in Japan, where the trend is toward tapering off, and accelerating its overseas expansion, will be successful.
As a company that is seizing on global niche demand, we look forward to the growth of santec, whose overseas sales ratio reached 71% in the fiscal year ended March 31, 2010. santec, whose overseas sales accounted for 71% of its total sales in FY3/2010, is expected to grow. The company manufactures optical measurement devices, etc. The number of cataract surgeries is increasing in the U.S., and a positive factor is the growth in sales of measurement devices necessary for the surgeries. The company’s performance this fiscal year has been strong, and the yen’s depreciation may further boost its performance,” said Reimi Shirahata, an analyst at FISCO.
One of the “companies whose brands are well-known in Japan, but who are making money overseas” is Yamaha Motor. In terms of sales composition in FY2009, sales in Japan accounted for only 8.7% of total sales. The company’s performance is supported by the fact that its boats, water bikes, and other high-margin, wealthy products have been a hit in North America.
Entertainment industry is also recovering
The restaurant industry, where raw material prices continue to soar, is first on the list of industries suffering from the weak yen. Hirokazu Komatsu of DZH Financial Research Inc.
We are focusing on Tridor Holdings, which operates Marugame Seimen and other restaurants. The company is aggressively developing its Marugame Seimen brand and other overseas outlets, and although its contribution to profits is low at this stage, there are high expectations for the company’s future. If the Marugame Seimen brand becomes popular overseas, we may see an increase in the number of tourists visiting Japan.
Even with the weak yen, the cost of raw materials has not skyrocketed, and overseas demand has also been secured. The entertainment industry, including anime and manga, is the ultimate domestic and foreign demand industry. Securities journalist Hiroaki Konno recommends some of the most promising stocks in the entertainment industry.
Toei Animation, a major animation production company, holds the copyrights to major titles such as “Slam Dunk” and “Dragon Ball. Its overseas copyright business is currently doing well, and we can expect further development in the future. Another company that became a hot topic when it went public this year is ANYCOLOR, which operates and manages famous VTubers such as “Nijisanji. ANYCOLOR, which operates and manages famous VTubers such as “Nijisanji. Niji-sanji” was one of the first VTuber groups to focus on English-language video distribution, and has attracted the attention of overseas investors.
Let’s take a look at stable stocks with a large overseas market share and solid management. Mr. Konno continues.
Olympus, which boasts a 70% share of the global market for gastrointestinal endoscopes, is a candidate as a defensive stock that will not be affected by global inflation or economic recession. Nikon, a camera manufacturer, is supported by strong demand from overseas. In addition to the recovery in travel demand providing a tailwind, Nikon also manufactures exposure systems and related equipment necessary for the manufacture of semiconductors and electronic components, and can be said to be a company with strong grounding.
The best company for a hot investment that earns from dividends is Hirogin Holdings, of which Hiroshima Bank is the core. The current share price is in the 600-yen range, making it easy to reach, and the dividend yield is high at 4.41%.’ There is also the positive factor that the summit will be held in Hiroshima in 2011, and inbound demand will boost the local economy.
Finally, Mr. Shirahata mentioned the following stable stocks.
“Kyocera Corporation, a major electronic components manufacturer, has many overseas bases and its overseas sales ratio is high at over 60%. The company’s consolidated sales have reached a record high, and it is expected to increase its dividend. Shin-Etsu Chemical, which has the top share of the global market for vinyl chloride resin and semiconductor silicon, is also performing well and will maintain its market share as a stable supplier of high-tech materials.”
Investing in solid companies that have the ability to earn foreign currency is one way to protect your assets from being worn down by the super weak yen.
From the November 18, 2022 issue of FRIDAY
PHOTO： Kyodo News Afro