Selected by Budget! Summer Treasure Japanese Stocks” to Target with Bonuses

It’s that time of year again, the season of summer bonuses. According to the Keidanren and other organizations, analysis shows that this year’s average bonus payment tends to be relatively higher than in previous years. However, there are currently many uncertain factors, such as the weak yen and concerns about inflation, that make it unwise to leave cash in salt.

If that is the case, we would like to put part of our bonus into stock investments that also provide dividends and shareholder benefits. In this issue, we have prepared a table of Japanese stocks carefully selected by investment professionals according to budgets of 100,000 yen, 300,000 yen, and 500,000 yen, so that you can use it as a reference when selecting stocks.

In this section, we will look at stocks for each of the topics that are likely to attract attention in the second half of this year. First, we will look at stocks that are likely to benefit from the yen’s rapid depreciation. For companies with strong foreign demand, a weaker yen often leads to better-than-expected earnings results. Securities journalist Hiroaki Konno says, “The “level” of unmanned driving is a key factor in the market’s performance.

Honda, which is conducting Level 4 unmanned driving tests on public roads, is basing its earnings forecast on the assumption that the yen will appreciate to 120 yen to the dollar. Currently, the yen is hovering around 135 yen to the dollar, and we think there is a possibility that it could go as high as 140 yen to the dollar. The more the yen weakens, the higher Honda’s financial results will be. Also, it will be interesting to see how the EV business, in which Honda is collaborating with Sony, develops in the future. Another automaker with upside potential is Mitsubishi Motors, whose shares can be bought for less than 100,000 yen per unit.

In Search of Cheap Nippon

Like Honda and Mitsubishi Motors, Subaru, which has a large overseas fan base, is also expected to see an upturn in earnings due to the weak yen. Kyoko Amamiya, an economics journalist and president of Amamiya Research Institute, says, “In the past few years, EV investments have been increasing.

Subaru, which has been investing seriously in EVs for the past few years, can also expect a boost in earnings due to the yen’s depreciation. In addition, Subaru actually possesses flight control technology for fighter jets and unmanned aerial vehicles, and is often named as a hidden military defense stock. It can be said that Subaru is a stock linked to the increase in defense spending expected in Japan in the future.

Other defense stocks mentioned include Kawasaki Heavy Industries, which has the second largest contract with the Ministry of Defense, and Nippon Avionics, a defense information display device manufacturer that originated with NEC. If the LDP wins the Upper House election, the debate on “defense spending at 2% of GDP” will accelerate. If this happens, the presence of related issues should increase.

Speaking of a weak yen, we can look forward to inbound foreign tourists who will come to Japan in search of a “cheap Japan,” and with the easing of entry restrictions on foreign tourists on June 10, there are more opportunities to see foreigners in urban areas. In light of this, economic journalist Hideki Wajima comments, “Japan has one of the highest rates of inbound tourism in the world compared to other countries.

Japan has been in a state of ‘isolation’ for a year, or even a year and a half longer than other countries. The weak yen is a tailwind for inbound tourism, and I think the biggest theme will be the so-called ‘reopening’ (resumption of economic activity). From this perspective, Hub, which operates the British-style Pub Hub, and Colowide, which operates Kappa Sushi and other restaurants, are likely to see their stock prices rise. The supply-demand balance for electricity is getting tighter.

Amid Tight Electricity Supply and Demand

As we can see, tourism demand is still one of the most promising topics for this summer. What stocks are particularly strong in the area of goods consumption?

Japanese products, especially watches, are popular among the Chinese. Many people buy watches not only for personal ownership but also in large quantities for resale, and there is solid demand for products from manufacturers such as Seiko Holdings Corporation and Citizen Watch, which offer a wide lineup of products in a range of price points. Citizen is also strong in the U.S., its largest market,” said Amemiya.

Even with the weak yen, it is reasonably priced, high-quality Japanese products that are popular among foreigners. Katsumi Sato, a stock analyst, says, “Citizen has a large share in the contract manufacturing of cosmetics.

One example is Japan Color Material Industries Laboratory, which has a large share of the cosmetics contract manufacturing market. It has business with most of Japan’s cosmetics manufacturers and is likely to benefit from the inbound resurgence. In Japan, demand for makeup should rebound as the mask lifestyle comes to an end and people go out more.
Similarly, Zojirushi Mahobin is expected to grow both domestically and internationally. Domestically, there are growing concerns about food inflation in place of a nest egg demand. As a result, people will refrain from eating out and will increase the frequency of cooking for themselves. Demand for rice cooker and lunch box products for the rice-eating Asian market can also be expected. It is also attractive that the purchase of 100 shares, the minimum unit, entitles the holder to a product special benefit of 1,000 yen.

Along with the inbound travel, Japan is also facing a “heat wave” this summer, with temperatures exceeding 35°C even in June and daily reports of a tight supply and demand situation for electricity. In addition, Japan has been hit by high global crude oil prices this year, and the country is also suffering from the effects of these high prices. Under these circumstances, power and energy-related stocks are the most likely to be bought. Mr. Wajima explains.

The government holds a stake in INPEX, which is doing very well in oil development and has a dividend yield of 3%. Mitsubishi Corporation, which handles coal and iron ore, is also on an upward trend from a medium- to long-term perspective, so there is no harm in buying at this time.

Mr. Sato also mentioned Osaka-based Meisei Kogyo as a related stock.

Originally a manufacturer that undertakes thermal insulation work, Meisei Kogyo has a proven track record in LNG (liquefied natural gas) shipping terminals, receiving terminals, and carrier construction. We have experience in LNG (liquefied natural gas) shipping terminals, receiving terminals, carrier construction, etc. As the world moves away from Russia as an energy resource source and develops its own bases, it is an advantage that we already have the know-how. As a shareholder, I am also happy to receive a special benefit of 1,000 yen worth of JCB gift cards for holding 200 or more shares.

Among electric power companies, Chugoku Electric Power Co. Mr. Konno explained the reason for this.

The power company’s top priority is to secure a stable power source, and the current heat wave seems to have increased the significance of this priority. Combined with high fuel prices, many are evaluating the restart of nuclear power plants. At this juncture, the governor of Shimane Prefecture agreed to the restart of the No. 2 reactor at the Shimane Nuclear Power Plant, which is under the jurisdiction of Chugoku Electric Power Company. It is unlikely that the shortage of raw materials for electricity will be resolved rapidly in the future, so it is natural that electric power companies that operate nuclear power plants will be bought.

What about “stable stocks” that are less susceptible to economic fluctuations? Mr. Konno mentioned two stocks of interest.

Menicon, which manufactures contact lenses, and Sawai Group Holdings, which manufactures generic drugs, are two stocks that immediately come to mind. Menicon is attractive not only because of domestic demand, but also because of its large overseas sales in China, Europe, and the United States. In addition, the generic drug company Sawai is enjoying a tailwind from rising demand for alternatives due to the suspension of shipments by its peer Nichi-Iko. Daily necessities and medicines, which are needed no matter how the economy moves, should be held as the basis for defensive stocks.

Higher Yield than Deposits in Banks

Within a budget of ¥100,000 that can be easily invested is Mitsubishi UFJ Financial Group. The dividend yield on the company’s stock is currently 4.3%, so it is more beneficial to buy shares of the bank, which does not fall far from the bottom, than to put bonuses into a bank account that pays almost no interest.

Which of the following stocks, also available for less than 100,000 yen, offers both stability and growth? Reimi Shirahata, an analyst with the financial information service “Fisco,” suggests the following stocks.

Mitsubishi HC Capital, a general leasing company, is expected to record its highest profits for the second consecutive fiscal year, has announced dividend increases for 24 consecutive fiscal years, and its dividend yield is in the upper 4% range. It is a hot stock for “hot stocks” that can be purchased for less than ¥100,000.

Finally, let us introduce an “unexpected stock” that is expected to grow as a result of the Kishida administration’s policies. One of them is the dental industry.

Dentoai Medical, which has the top share of mail-order sales of dental products, is a company to watch. This year, the Kishida administration’s “Basic Policies” clearly stated that it is considering the realization of “universal dental checkups for the entire nation. The idea of preventive dentistry is expected to spread further among companies and local governments, so it is worth paying attention to the increase in demand.

You can expect the price to rise in the future, or you can buy stocks thinking of them as deposits with high interest rates. Why not invest in them before the value of your bonus cash goes down the drain?

From the July 15, 2022 issue of FRIDAY