Time For Womenomics?: Ask These Japanese Stocks With

James Dennin, Kapitall: Womenomics - making money and making babies - is the cure for the struggling Japanese economy. Wait. What?

Japanese Prime Minister Shinzo Abe – the source of 'Abenomics' – rang the closing bell of the New York Stock Exchange yesterday. It was all part of a charm offensive to calm Western concerns about investing in a nation where a shrinking population, dwindling capital expenditure, and one of the greatest environmental catastrophes in human memory have stalled growth.

[Read more from Kapitall: Alibaba IPO Coming to New York]

Abe came to power with a pledge to turn Japan around, and return it to its glory days when the country emerged from post-war rubble to become a manufacturing powerhouse in a matter of decades. 

Manufacturing has been stalled in Japan, in part because Japanese workers now seem to make too much. Abenomics, or the set of economic policies that the Prime Minister has championed as part of his platform, has three prongs: monetary easing, fiscal stimulus, and structural reforms aimed at growth.

In a prominent Wall Street Journal editorial yesterday, Abe revealed a fourth component of his plan: "Womenomics." His goal is to have more women in boardrooms by the Olympics in 2020 – saying that this will not only boost Japan's GDP – but also reverse the trend of declining fertility. 

Abe's plans are laudable in many respects, but he faces some pretty big obstacles:
  • Japan is seen as an extremely conservative country.
  • Corporate executives are slow to invest.
  • Cultural norms can be hard to change.

Abe blames Japan's demographic problems not on women in the workforce – as his opponents often do - but  on the lack of access to day-care and maternity leave.  Similar measures are being proposed by another economic giant with a demographic problem – Germany, which also sees  better day-care as as solution to its rapidly aging population.  

Solving the problem of a shrinking population is hard, but necessary. Investment in Japan has been stalled by a rigorous regulatory climate and a shrinking market of workers and consumers. It certainly doesn't help that Japan is surrounded by rapidly expanding young economies in China, Thailand, and Indonesia, where labor is also incredibly cheap. While Japan's economy now leads the G7 (the world's  seven most advanced economies) in growth, Abe is still not succeeding at getting people to invest at home. This comes despite a proliferation of new Japanese factories across Asia.

Yet Abe insists emphatically that Japan is now a "buy!" With due deference to Mr. Prime Minister – we decided to see what the analysts are saying. So we ran a screen on Japanese stocks that trade on the NYSE, looking for those with "strong buy ratings" as well as low forward price equity ratios (Forward P/E) – a sign that a company's earnings may be expected to grow in the near future. .

We were left with five big name companies on our list. 

Do you see investment opportunities in Japan? Use the list below as a starting point for your own analysis. 

1. Canon Inc. ( CAJ): Manufactures and sells network copying machines, laser printers, inkjet printers, cameras, and lithography equipments in the Americas, Europe, Asia and Oceania. Market cap at $36.83B, most recent closing price at $31.95.

Forward P/E: 11.78.
 

 

2. Honda Motor Co., Ltd. ( HMC): Engages in the development, manufacture, and distribution of motorcycles, automobiles, and power products primarily in North America, Europe, and Asia. Market cap at $70.22B, most recent closing price at $38.96.

Forward P/E: 11.42.
 

 

3. Nippon Telegraph & Telephone Corp. ( NTT): Provides telecommunications services to residential and business customers in Japan. Market cap at $63.08B, most recent closing price at $26.73.

Forward P/E: 9.09.
 

 

4. Sumitomo Mitsui Financial Group Inc. ( SMFG): Provides various banking and financial products and services in Asia and the Oceania, the Americas, Europe, the Middle East, and Africa. Market cap at $68.64B, most recent closing price at $10.14.

Forward P/E: 10.84.
 

 

5. Toyota Motor Corporation ( TM): Engages in the design, manufacture, assembly, and sale of passenger cars, minivans, and commercial vehicles. Market cap at $206.82B, most recent closing price at $130.56.

Forward P/E: 10.13. 

 

 

( List compiled by James Dennin, a Kapitall Writer. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)

null

More from Stocks

Jim Cramer on the Problem With the Case for More Rate Hikes

Jim Cramer on the Problem With the Case for More Rate Hikes

Video: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

Video: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

Rent-A-Center Bulls Quadruple Their Money

Rent-A-Center Bulls Quadruple Their Money

Dow Turns Lower as Losing Streak Extends

Dow Turns Lower as Losing Streak Extends

Warren Buffett Thinking Apple Will be Worth $2 Trillion?

Warren Buffett Thinking Apple Will be Worth $2 Trillion?