Undervalued Japanese Stocks To Watch In September 2024

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Japan's stock markets have shown mixed performance recently, with the Nikkei 225 Index gaining 0.5% while the broader TOPIX Index fell by 1.0%. Amid these fluctuations and a strengthening yen, investors are keenly watching for opportunities in undervalued stocks that could offer significant potential. In this context, identifying stocks that are trading below their intrinsic value can be particularly advantageous, especially when considering current market conditions and economic indicators.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name

Current Price

Fair Value (Est)

Discount (Est)

Hagiwara Electric Holdings (TSE:7467)

¥3470.00

¥6771.15

48.8%

Kotobuki Spirits (TSE:2222)

¥1719.00

¥3434.73

50%

Plus Alpha ConsultingLtd (TSE:4071)

¥2087.00

¥4159.36

49.8%

Stella Chemifa (TSE:4109)

¥4170.00

¥8128.08

48.7%

I-PEX (TSE:6640)

¥1496.00

¥2890.12

48.2%

Ohara (TSE:5218)

¥1298.00

¥2594.34

50%

West Holdings (TSE:1407)

¥2613.00

¥5098.28

48.7%

Infomart (TSE:2492)

¥317.00

¥616.98

48.6%

SHIFT (TSE:3697)

¥11825.00

¥23318.38

49.3%

Visional (TSE:4194)

¥8640.00

¥17015.15

49.2%

Click here to see the full list of 80 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's dive into some prime choices out of the screener.

Trend Micro

Overview: Trend Micro Incorporated develops and sells security-related software for computers and related services in Japan and internationally, with a market cap of ¥1.14 trillion.

Operations: The company's revenue segments are ¥84.17 billion from Japan, ¥63.59 billion from Europe, ¥70.46 billion from the Americas, and ¥126.28 billion from the Asia Pacific region.

Estimated Discount To Fair Value: 34%

Trend Micro, trading at ¥8720, is significantly undervalued based on its estimated fair value of ¥13210.48. The company's earnings are forecast to grow 21.75% annually over the next three years, outpacing the Japanese market's 8.6%. Despite a recent drop in profit margins from 11.2% to 6.4%, Trend Micro's revenue is expected to grow faster than the market at 6.3% per year. Recent M&A rumors and strategic partnerships highlight its potential for future growth and stability in AI-driven cybersecurity solutions.

TSE:4704 Discounted Cash Flow as at Sep 2024
TSE:4704 Discounted Cash Flow as at Sep 2024

Union Tool

Overview: Union Tool Co. produces and sells cutting tools, linear motion products, and metal machining equipment in Japan and internationally, with a market cap of ¥103.13 billion.

Operations: Revenue segments (in millions of ¥): Asia: ¥15.05 billion, Japan: ¥19.84 billion, Europe: ¥2.17 billion, North America: ¥1.84 billion