The Era of 150 Yen to the Dollar Has Arrived! Here are the 30 Japanese Stocks with Resilience Despite the Super Weak Yen

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.