After the GW holiday, a rush of full-year earnings announcements will arrive. Since good earnings directly lead to higher stock prices, we would like to stock up while we still can. This is especially true this year, when the opportunity of the century to boost stock prices has arrived.
The source of energy to boost stock prices is a major event shaking the Japanese stock market. A number of major companies listed on the Tokyo Stock Exchange’s prime market are in danger of being “delisted.
In April 2010, the TSE reorganized its markets into three categories: Prime, Standard, and Growth. Although the TSE is currently in a transitional period, there are many companies that do not meet the criteria for listing on the prime market, which is the highest level. TSE has warned that if they fail to improve by March ’26, they may be delisted.
In addition, the TSE also takes a scalpel to the PBR (price book value ratio) of listed companies. Simply put, a stock is overvalued if its PBR is above 1x and undervalued if it is below 1x.
In the prime market, more than 50% of companies have P/B ratios below 1x, which is unique in Japan. The TSE is urging companies to disclose their plans to improve their P/B ratios to more than 1x. Behind this unprecedented situation lies an investment opportunity.
Many companies with P/B ratios of less than 1x have little growth potential but are not investing and are hoarding internal reserves. The TSE is urging these companies to return profits to shareholders by buying back their own shares, raising their share prices, and increasing dividends. From an investor’s perspective, the share price is expected to rise thanks to the requests for improvement,” said securities analyst Shigeki Unozawa.
Which “bargain” stocks have emerged as a result of the TSE reorganization, and which will investment professionals choose? Which are the “bargain” stocks that have emerged as a result of the TSE reorganization?
Idemitsu Kosan, a major energy company, has announced that it will buy back its own shares until February 2012. The company is attracting global attention not only for its gasoline-related products but also for its development of the light-emitting material OLED. Another company to mention is JFE Holdings, which has the second largest market share in steel in Japan, and is considering expanding production of special steel sheets that are essential for EVs (electric vehicles), and is expected to grow further. Idemitsu Kosan’s dividend yield of 4.22% and JFEHD’s high dividend of 4.93% are also attractive.
Many low P/B ratios stocks pay high dividends, making them ideal for “leave-it-there” investments. For example, Kawasaki Kisen Kaisha, Ltd. pays a very high dividend yield of 12.10% for the fiscal year ending March 2011. The table on the left summarizes the dividend yield of each stock.
Securities journalist Hiroaki Konno also recommends a well-known company among the bargain stocks.
Konica Minolta, a manufacturer of information equipment such as multifunctional copiers, is also working on new fields such as IT support for offices. Among stocks with low P/B ratios, I recommend buying stocks of companies that are making moves to increase their corporate value in this way.
The “danger zone” for delisting is lined with major TV stations such as Fuji Media Holdings (Fuji HD) and TBS Holdings.
In February of this year, a written opinion regarding foreign investment in TV stations triggered a buying frenzy in TV station stocks. There is a possibility that restrictions on foreign investment will be reviewed, and there are elements of a major turnaround,” said Hirokazu Komatsu of DZH Financial Research.
Financial trader Ulf Murata focuses on Fuji HD.
Fuji HD is focusing more on its aspect as an “asset management company” than on its media business. Looking at the breakdown of profits, real estate income and gains on sales of investment securities are significant. We believe Fuji, with its smaller market capitalization, has more upside potential in its stock price than TBS.”
Finally, Mr. Shunsuke Tojo, a “billionaire investor,” offers his advice on affordable high-dividend stocks.
Okasan Securities Group announced a commemorative dividend in March of this year, and the stock was stopped at 517 yen, and is now back in the 400-yen range. The dividend yield is in the 4% range, so a better strategy is to wait for the price to rise while receiving the dividend.
Large companies that have had their asses handed to them by the TSE are about to make their move. We must not miss the boat.
From the May 12 and 19, 2023 issue of FRIDAY
PHOTO： Kyodo News, Jiji Press