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James Li
James Li
Articles (895)  | Author's Website |

Top 5 Buffett-Munger Companies in Japan

Trump announces trade deals with Japan as optimism with China fades

In light of President Donald Trump signing two trade deals with Japan earlier this week, the top five Japanese companies on Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)’s screener are GL Sciences Inc. (TSE:7705), Estic Corp. (TSE:6161), Meiko Construction Co. Ltd. (NGO:1869), Saftec Co. Ltd. (TSE:7464) and Toei Animation Co. Ltd. (TSE:4816).

Dow tumbles as concerns regarding trade deal with China outweigh trade deals with Japan

The Dow Jones Industrial Average traded at an intraday low of 26,139.80 Tuesday morning, down 338.22 points from Monday’s close of 26,478.02.

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According to Reuters, Trump called the new trade deal with Japan “a game changer” for U.S. farmers and ranchers: Even though products like butter and skim milk might not benefit from the deal, the U.S.-Japan trade deal is expected to bring U.S. beef, pork and wine exports “in line with Trans-Pacific Partnership competitors.”

Despite the trade deal with Japan, the Dow tumbled over 200 points as investors raise concerns regarding trade talk progress between the U.S. and China. The South China Morning Post said China Vice Premier Liu He will not carry the title “special envoy” for President Xi Jinping.

Buffett-Munger Screener identifies opportunities

As investors grapple with concern regarding trade between the U.S. and China, opportunities might exist in Japanese securities in light of the U.S.-Japan trade agreement. GuruFocus’ Buffett-Munger Screener lists companies that have strong business predictability, improving operating margins and trade at attractive prices based on the price-earnings-to-growth ratio. Berkshire Hathaway Inc. (NYSE:BRK.A)(BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) define companies that have the above characteristics as “good companies that are available at attractive prices.”

GL Sciences

With a price-earnings-to-growth ratio of 0.38, GL Sciences ranks No. 1 on the Buffett-Munger list of Japanese companies.

The Tokyo-based company primarily engages in the manufacturing, purchasing and sale of analysis equipment, semiconductor and non-contact interchange card related products. GuruFocus ranks the company’s financial strength and profitability 8 out of 10 on several positive investing signs, which include robust interest coverage, a four-star business predictability rank and operating margins that are outperforming 81.58% of global competitors despite contracting over 13% per year on average over the past five years.

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Estic

With a price-earnings-to-growth ratio of 0.42, Estic ranks second on the list.

The Osaka-based company manufactures and sells electric power tools, industrial robots and automatic assembly lines. GuruFocus ranks Estic’s profitability 10 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 7, a four-star business predictability rank and profit margins and returns that outperform over 91% of global competitors.

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Meiko Construction

With a price-earnings-to-growth ratio of 0.45, Meiko Construction ranks third on the list.

The Nagoya-based company engages in civil engineering and construction. GuruFocus ranks Meiko’s financial strength 8 out of 10 on several positive investing signs, which include robust interest coverage and a debt-to-equity ratio that outperforms 83.1% of global competitors.

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Safetec

With a price-earnings-to-growth ratio of 0.51, Safetec ranks fourth on the list.

The Tokyo-based company provides a range of safety products, including under construction signs and other street warning signs. GuruFocus ranks Safetec’s profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and a three-year Ebitda growth rate that outperforms 85.31% of global competitors. Additionally, operating margins are outperforming 61.81% of global competitors despite contracting approximately 11.8% per year on average over the past five years.

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Toei Animation

With a price-earnings-to-growth ratio of 0.55, Toei Animation ranks fifth on the list.

The Tokyo-based animation company engages in the planning and production of animation products for theaters and televisions. GuruFocus ranks Toei Animation’s financial strength 10 out of 10 and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage, a 4.5-star business predictability rank and operating margins that have increased approximately 20.10% per year on average over the past five years.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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Comments

run3coolmathgames
Run3coolmathgames - 1 week ago    Report SPAM

The article shared very well, the information is very helpful for my work

red ball

TodWong
TodWong - 1 week ago    Report SPAM

Good informatio, James,

Where can you find Warren's filling for Japan companies ?

James Li
James Li premium member - 1 week ago

@TodWong I would suggest starting with Buffett's shareholder letters:

http://www.berkshirehathaway.com/letters/2018ltr.pdf

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