Japanese equities are experiencing a revival after outperforming most of their global peers for the last 18 months. This is fruitful news for investors like Warren Buffett, who placed his money in the Japanese market as early as August 2020.
After 25 years, Japan’s Nikkei 225 index hit a new all-time high. In contrast to the Nasdaq or S&P 500, this performance wasn’t a result of a handful of highly valued stocks. And, this doesn’t mean analysts don’t have favorites. Per Nikkei Asia, Goldman Sachs rounded up seven names that stood out, baptizing them as the "Seven Samurai" — in comparison to the U.S. market darlings, the Magnificent Seven.
What Are The Seven Samurai Stocks?
The following companies make up the Seven Samurai stock group.
Tokyo Electron Limited (OTCPK: TOELF)
Tokyo Electron Limited (TEL) is a company engaged in the manufacture and sale of electronic products for industrial uses. Its focus is on semiconductor and flat panel display (FPD) production equipment. Almost all semiconductor chips in the world go through the company’s equipment during the production process.
TEL is a vital part of the semiconductor market, so it trades similarly to semiconductor stocks at a P/E ratio of 48. The company has a net profit margin of 19.4% and an excellent balance sheet with 0 debt in almost a decade. While the company pays a dividend, it yields 1% — in line with the industry but not notable.
Mitsubishi Corporation (OTCPK: MTSUY)
Mitsubishi is the largest Japanese trading company with diverse revenue streams, including petroleum production, chemicals and minerals, the food industry, power solutions and automotive and mobility products.
Mitsubishi is among the vital Japanese conglomerates but trading at a reasonable P/E ratio of around 14x. The company has a net profit margin of 4.61%, and the management has been reducing its debt, building a strong balance sheet. The firm also pays a dividend yielding 1.5% but has a rather low 32% payout ratio, indicating sustainability and future growth potential.
Toyota Motor Corporation (NYSE:TM)
Toyota is the leading automotive company and the best-selling automaker in 2023, with 11.23 million cars sold. Despite reaching multi-year highs, its stock still trades around 10 times its earnings. Furthermore, it boasts a 10.3% net profit margin, which is above the industry average.
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