3 Japanese Exchange Stocks Estimated To Be Up To 49.5% Below Intrinsic Value

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Japan’s stock markets have made modest gains recently, with the Nikkei 225 Index rising 0.8% and the broader TOPIX Index up 0.2%. Amid ongoing market volatility and a commitment from the Bank of Japan to normalize monetary policy, investors are increasingly looking for undervalued opportunities. In this environment, identifying stocks trading below their intrinsic value can offer significant potential for growth as market conditions stabilize.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name

Current Price

Fair Value (Est)

Discount (Est)

Funai Soken Holdings (TSE:9757)

¥2342.00

¥4634.31

49.5%

IMAGICA GROUP (TSE:6879)

¥505.00

¥1005.28

49.8%

Kotobuki Spirits (TSE:2222)

¥1760.00

¥3434.73

48.8%

Hottolink (TSE:3680)

¥332.00

¥660.62

49.7%

BayCurrent Consulting (TSE:6532)

¥4422.00

¥8584.55

48.5%

EnomotoLtd (TSE:6928)

¥1495.00

¥2933.87

49%

Adventure (TSE:6030)

¥3775.00

¥7393.94

48.9%

Visional (TSE:4194)

¥8890.00

¥17120.62

48.1%

SBI ARUHI (TSE:7198)

¥867.00

¥1703.42

49.1%

freee K.K (TSE:4478)

¥3080.00

¥5917.03

47.9%

Click here to see the full list of 84 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's take a closer look at a couple of our picks from the screened companies.

Kotobuki Spirits

Overview: Kotobuki Spirits Co., Ltd. produces and sells sweets in Japan and has a market cap of approximately ¥266.62 billion.

Operations: The company generates revenue from several segments, including Shukrei (¥27.03 billion), Casey Shii (¥18.88 billion), Kotobuki Confectionery/Tajima Kotobuki (¥13.19 billion), Sales Subsidiaries (¥7.06 billion), and Kujukushima (¥6.56 billion).

Estimated Discount To Fair Value: 48.8%

Kotobuki Spirits is trading 48.8% below its estimated fair value of ¥3434.73, with a current price of ¥1760. Despite slower revenue growth forecasts (10.9% per year) compared to the market, its earnings are expected to grow faster than the JP market at 12.8% annually. Recent earnings showed a significant increase of 33.7%, and analysts agree on a potential stock price rise by 39.4%.

TSE:2222 Discounted Cash Flow as at Aug 2024
TSE:2222 Discounted Cash Flow as at Aug 2024

Strike CompanyLimited

Overview: Strike Company, Limited (TSE:6196) offers mergers and acquisitions brokerage services for small and medium-sized companies in Japan, with a market cap of ¥79.69 billion.

Operations: Strike Company, Limited generates revenue primarily from its M&A Intermediary Business, amounting to ¥17.97 billion.

Estimated Discount To Fair Value: 32.6%