The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By David Sterman NEW YORK ( StreetAuthority) -- I've been looking at stocks since I was in high school, back in the late 1970s. I eventually chose to turn my fascination with investments into a career. I figured stocks represented the single-best path to wealth creation, thanks to one simple statistic: If you hold an investment for an extended period, then history shows that riskier investments will generate better returns. This means during any 20-year period going back to the Great Depression, stocks always outperformed bonds, and bonds always outperformed cash. Because I was planning on a 50-year career, I was well prepared for short-term plunges, with the expectation that stocks would make up lost ground -- and then some -- during the subsequent decade. That axiom still applies here in the U.S. The S&P 500 has more than doubled in value since 1990, even with the gut-wrenching past few years. But for Japan, that axiom is no longer true. Home to the world's second-largest economy, Japan has seen its main stock index, the Nikkei, tumble, tumble again and tumble some more during the past 20 years. Take a look.
Japan's largest bank (in terms of assets), Mitsubishi UFJ Financial Group ( MTU), hit an eight-year low this week (Nov. 27). Though it was once valued at more than $200 billion, it is now valued at just $57 billion. Meanwhile, this bank generated an eye-popping $49 billion in free cash flow in fiscal (March) 2011, according to Thomson Reuters. Mitsubishi UFJ Financial has one of the premier providers of financing for inter-country trading transactions, providing shippers, manufacturers and other financial-services firms with logistical capital. In the first six months of the current fiscal year, the bank posted $9 billion in net income, or about $18 billion when annualized. This means it trades for a little more than three times annualized income. Investors interested in the Japanese banking sector should also check out Mizuho Financial ( MFG), Sumitomo Mitsui Financial Group ( SMFG) and Nomura Holdings ( NMR). These bank stocks also hit fresh lows this week, erroneously tied to the widening crisis in Europe.
To augment its position in printers and cameras, Canon has been targeting the high-end of the cinema camera market while quickly increasing presence in the medical-imaging market. The weak global economy is currently impeding growth, so sales are likely to increase less than 5% in 2011 and 2012. But make no mistake, this is another long-term winner with fortunes tied to many markets -- not just Japan. With shares hitting a 52-week low this week, it's time for a fresh look at this stock. Risks to Consider: These Japanese companies face rising competition from rivals in other parts of Asia, so they will need to readjust their manufacturing bases and other cost inputs in order to remain competitive. Action to Take: Perhaps the greatest appeal of Japanese stocks right now is the rising purchasing power of many neighboring Asian countries. Rising living standards in the region will most likely lead to higher demand for Japan's goods and services. This isn't to suggest that Japan is on the cusp of a robust economic revival, but only notes that the stocks of major Japanese companies such as the ones I mentioned above have become too cheap in light of their still-strong global footprints and could be set to rebound in a big way. Disclosure: Neither D. Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.
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