By a 5-4 vote, the Bank of Japan's Monetary Policy Board has recently, and to the surprise of many, decided to increase the monetary base at an annual pace of about 80 trillion yen. The bank previously announced that it would be 60-70 trillion yen, suggesting the BOJ is moving further into the QE world. This has caused markets and stocks to rally, leading to new record closing highs for the DJIA, and the S&P 500, as well as the best closing level for the Nasdaq since 2000.
Still, many investors have shied away from Japanese stocks and markets since the financial crisis of 2007-2008, which have been very rough years for many technology companies, car manufacturers, and without a doubt, real estate developers and sellers. New entrants in the car manufacturing industry, such as India's Tata Motors (TTM), and Elon Musk's Tesla Motors Inc. (TSLA) have only added to the cutthroat competition that Toyota Motors (TM) has had to deal with in that industry.
New technology startups and entrants have also forced many previous technology giants to reinvent themselves and add new products to their lines, or widen their product and service offerings. One Japanese company that has experienced relatively stagnant growth in the past few years has been Canon (CAJ). CAJ has been facing stiff competition from its two significant rivals, Ricoh Ltd, (RICOY), and Xerox Corporation (XRX), however, Canon may now be well positioned for growth, especially since it is a Zacks Rank #1 (Strong Buy) at this point in time.
Canon Incorporation Overview
CAJ is renowned for its excellent quality cameras, however, few investors may know of the company's entire diverse scope of products that it manufactures and sells, such as inkjet printers, laser printers, plain paper copying machines, lithography equipment, and most importantly, office multifunction devices and the cameras. Canon also operates in three segments: Office Business Unit, Imaging System Business Unit, and the Industry and Others Business Unit.
CAJ's Financials
The following are snapshots of how CAJ has been doing financially, comparing fiscal 2012 with 2013:
CAJ Important Figures (Enterprise Value from Yahoo! Finance)
Toyota Motors Corporation Overview
Toyota has always enjoyed success and widespread acceptance in the industry. It is a Japanese car designer, manufacturer, and marketer that have been lauded for its excellent cars and how its cars retain great resale value, and above all, how the cars are fuel efficient.
The success does not stop there; TM was ranked #1 worldwide in terms of the most popular cars in 2013, and despite frequent car recalls, Toyota has recently reported that in the US, its passenger car sales grew by 3% in October, signaling that the company is positioned for growth in the near future, as it steals some market share from key rivals.
Toyota's sales have grown by +6.9% in October alone, beating analysts' expectations of only +6.4% growth. In one of the world's largest car markets, China, Toyota has also reported significant growth of +27.1% in October sales.
Powered by strong SUV sales abroad and a weak Yen, TM has recently also raised its fiscal year net profit forecast to a record 2 trillion yen, or about $17.6 billion. There is no doubt that TM is in the best position among auto manufacturers to benefit from a weakening yen due to its high reliance on exports. TM manufactures about 40% of its global production in Japan, and exports around half of that. Toyota's net profit also rose to $4.2 billion on revenues from the July to September fiscal quarter, Q3. TM is by far the largest Japanese auto maker, and it has outperformed Honda, Nissan, Isuzu, and the S&P 500 as of late.
TM's Financials
The following are snapshots of how TM has been doing financially, comparing fiscal 2012 with 2013:
TM Important Figures (Enterprise Value from Yahoo! Finance)
Bottom Line
It is always up to the investor with which company he feels more comfortable with, but they are both Zacks Rank #1 (Strong Buy), and positioned for growth in the future. CAJ has consistently reinvented and redefined the industry it is focused on, and any investor looking for a pick in that industry should not neglect CAJ.
TM on the other hand, seems like an excellent investment for those into the automobile industry, not only is it less volatile than other car makers such as Tesla Motors Inc. (TSLA), it has also consistently outperformed the S&P 500, and been much more reliable when it comes to turning in profits.
It is also worth noting that TM's enterprise value is $100 billion more than its market capitalization, which is something very positive from a valuation standpoint, and shows that the company may be a bargain right now.
CAJ seems to be struggling for growth in the past two years, and it definitely has not fully recovered from the financial meltdown 8 years ago, or so. CAJ does maintain a higher dividend yield than TM, and though this does not place CAJ as the better stock to invest in, CAJ is for those who are looking for unique foreign stocks in the tech world.
TM, on the other hand, is a car juggernaut, and it has almost everything going for it to just pop, except its PEG ratio, which is higher than the industry's average. Other than that, its forward P/E ratio is great, and you cannot ignore the fact that its enterprise value is impressive. On top of that, the company has surprised EPS estimates positively last quarter by about +17.59%, while the consensus estimate has moved sharply higher over the past few months, suggesting that TM could be a solid choice for investors in the face of more easing by the Bank of Japan.
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TOYOTA MOTOR CP (TM): Free Stock Analysis Report
CANON INC ADR (CAJ): Free Stock Analysis Report
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New technology startups and entrants have also forced many previous technology giants to reinvent themselves and add new products to their lines, or widen their product and service offerings. One Japanese company that has experienced relatively stagnant growth in the past few years has been Canon (CAJ). CAJ has been facing stiff competition from its two significant rivals, Ricoh Ltd, (RICOY), and Xerox Corporation (XRX), however, Canon may now be well positioned for growth, especially since it is a Zacks Rank #1 (Strong Buy) at this point in time.
Canon Incorporation Overview
CAJ is renowned for its excellent quality cameras, however, few investors may know of the company's entire diverse scope of products that it manufactures and sells, such as inkjet printers, laser printers, plain paper copying machines, lithography equipment, and most importantly, office multifunction devices and the cameras. Canon also operates in three segments: Office Business Unit, Imaging System Business Unit, and the Industry and Others Business Unit.
CAJ's Financials
The following are snapshots of how CAJ has been doing financially, comparing fiscal 2012 with 2013:
| 12/31/2013 | 12/31/2012 | ||
| Revenue (in millions) | $35537.00 | Revenue (in millions) | $39998.00 |
| Gross Profit (in millions) | $17128.00 | Gross Profit (in millions) | $18965.00 |
| Net Income (in millions) | $2281.00 | Net Income (in millions) | $2672.00 |
| Diluted Net EPS | 1.91 | Diluted Net EPS | 2.20 |
CAJ Important Figures (Enterprise Value from Yahoo! Finance)
| Market Capitalization | $40.55 B |
| Enterprise Value | $27.38 B |
| Forward P/E (1) | 14.48 |
| P/E (TTM) | 14.98 |
| Dividend Yield | 3.75% |
| PEG | -14.48 |
Toyota Motors Corporation Overview
Toyota has always enjoyed success and widespread acceptance in the industry. It is a Japanese car designer, manufacturer, and marketer that have been lauded for its excellent cars and how its cars retain great resale value, and above all, how the cars are fuel efficient.
The success does not stop there; TM was ranked #1 worldwide in terms of the most popular cars in 2013, and despite frequent car recalls, Toyota has recently reported that in the US, its passenger car sales grew by 3% in October, signaling that the company is positioned for growth in the near future, as it steals some market share from key rivals.
Toyota's sales have grown by +6.9% in October alone, beating analysts' expectations of only +6.4% growth. In one of the world's largest car markets, China, Toyota has also reported significant growth of +27.1% in October sales.
Powered by strong SUV sales abroad and a weak Yen, TM has recently also raised its fiscal year net profit forecast to a record 2 trillion yen, or about $17.6 billion. There is no doubt that TM is in the best position among auto manufacturers to benefit from a weakening yen due to its high reliance on exports. TM manufactures about 40% of its global production in Japan, and exports around half of that. Toyota's net profit also rose to $4.2 billion on revenues from the July to September fiscal quarter, Q3. TM is by far the largest Japanese auto maker, and it has outperformed Honda, Nissan, Isuzu, and the S&P 500 as of late.
TM's Financials
The following are snapshots of how TM has been doing financially, comparing fiscal 2012 with 2013:
| 12/31/2013 | 12/31/2012 | ||
| Revenue (in millions) | $256919.00 | Revenue (in millions) | $234601.00 |
| Gross Profit (in millions) | $48908.00 | Gross Profit (in millions) | $36398.00 |
| Net Income (in millions) | $19916.00 | Net Income (in millions) | $10230.00 |
| Diluted Net EPS | 11.32 | Diluted Net EPS | 6.46 |
TM Important Figures (Enterprise Value from Yahoo! Finance)
| Market Capitalization | $192.36 B |
| Enterprise Value | $299.98 B |
| Forward P/E (1) | 9.53 |
| P/E (TTM) | 10.36 |
| Dividend Yield | 1.51% |
| PEG | 1.36 |
Bottom Line
It is always up to the investor with which company he feels more comfortable with, but they are both Zacks Rank #1 (Strong Buy), and positioned for growth in the future. CAJ has consistently reinvented and redefined the industry it is focused on, and any investor looking for a pick in that industry should not neglect CAJ.
TM on the other hand, seems like an excellent investment for those into the automobile industry, not only is it less volatile than other car makers such as Tesla Motors Inc. (TSLA), it has also consistently outperformed the S&P 500, and been much more reliable when it comes to turning in profits.
It is also worth noting that TM's enterprise value is $100 billion more than its market capitalization, which is something very positive from a valuation standpoint, and shows that the company may be a bargain right now.
CAJ seems to be struggling for growth in the past two years, and it definitely has not fully recovered from the financial meltdown 8 years ago, or so. CAJ does maintain a higher dividend yield than TM, and though this does not place CAJ as the better stock to invest in, CAJ is for those who are looking for unique foreign stocks in the tech world.
TM, on the other hand, is a car juggernaut, and it has almost everything going for it to just pop, except its PEG ratio, which is higher than the industry's average. Other than that, its forward P/E ratio is great, and you cannot ignore the fact that its enterprise value is impressive. On top of that, the company has surprised EPS estimates positively last quarter by about +17.59%, while the consensus estimate has moved sharply higher over the past few months, suggesting that TM could be a solid choice for investors in the face of more easing by the Bank of Japan.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
CANON INC ADR (CAJ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
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