NEW YORK (TheStreet) -- Even before Japan's earthquake and tsunami, the nation's stock market had languished for years. But now some managers of strong-performing international mutual funds are spotting bargains there.

During the five years ending in February, Japan stock funds lost 6.8% annually, according to Morningstar. Hurt by the disasters, the funds dropped another 5% in March.

"Japanese stocks were cheap before the earthquake, and now some of them are very attractive," says Taizo Ishida, portfolio manager of

Matthews Asia Pacific Investor

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, a fund that returned 7.0% annually during the past five years and outdid 99% of its peers.

To appreciate the bargains that are available, compare the current prices of Japanese stocks to the levels of January 1995, the time of the Kobe earthquake. Back then, the Tokyo market had a price-book ratio of more than 2, says Ishida. Today the market commands a price-book ratio of around 1. That's substantially cheaper than the

S&P 500

, which currently has a price-book ratio of 2.2.

Make no mistake, Japanese stocks have slumped for good reasons. The earthquake and related disasters will disrupt many companies for months. More importantly, Japan faces serious long-term problems, including huge budget deficits and a rapidly aging population.

But Ishida and other managers argue that some solid stocks have been unduly punished. The managers favor powerhouse exporters and companies that will not suffer much if the domestic economy remains sluggish.

Auto manufacturers look particularly cheap, says Sarah Ketterer, portfolio manager of

Causeway International Value

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, which has returned 2.4% annually and outdone 80% of its foreign large-value peers. Ketterer says that the auto companies will face parts shortages and other disruptions for the next two quarters, but after that, the top producers should return to normal operations.

A favorite holding is

Honda Motor

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, which has a price-book ratio of 0.6 and price-to-earnings ratio of 5. She says that the Japanese car market has been stagnant for years but more than 85% of Honda's sales come from abroad.

"Honda is particularly interesting because it has a rapidly growing motorcycle business in Latin America and Asia," she says.

Toyota Motor

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is another big exporter that has been undervalued, says Edward Gray, portfolio manager of

TheStreet Recommends

Delaware International Value Equity

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, which returned 1.6% annually during the past five years, outdoing 66% of its peers.

Toyota shares suffered after the company faced a series of embarrassing recalls. Gray says that incidents have forced the car maker to focus on improving its quality controls. "Toyota has the resources to get the job done," says Gray. "This company is still one of the highest-quality manufacturers in the world."

Gray also likes

Asahi Glass

(ASGLY)

, an exporter that makes glass panel displays for TVs. The stock sells at a price-to-earnings ratio of only 10, and the business should improve as the global economy recovers. Gray says that the company has a firm lock on its niche. "This is a technologically sophisticated business, and there are high barriers to entry," he says.

While Japan struggles, China continues to boom, and its GDP grew 9.7% in the first quarter. Sales to China are providing an important lift to many Japanese companies, says Ishida of Matthews Asia Pacific. He likes

Fanuc

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, which produces robots and other equipment for factory automation. The company derives about one-third of its sales from China.

Ishida says that Fanuc recorded few sales in China five years ago because factories relied on cheap labor instead of machines. Since then, Chinese wages have risen at double-digit annual rates, and Chinese auto producers are now investing heavily in equipment that can hold down costs.

Ishida also likes

SOFTBANK

(SFTBY.PK), which provides mobile phone service and operates Yahoo! Japan. The company has an investment in

Alibaba Group

, a fast-growing Chinese e-commerce company. "This is a way to play the growth of the Internet in China," says Ishida.

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Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.