Anyone who follows Japanese business these days knows its manufacturers are taking it on the chin as export markets shrivel up due to the global recession. It seems companies like Toyota (NYSE:TM) and Honda (NYSE:HMC) are struggling to make money just like GM (NYSE:GM) and Ford (NYSE:F), albeit for different reasons.

While GM and Ford are losing money because no one wants to buy their products and their cost structure is far too high, the Japanese are struggling due to a wildly appreciating currency. In 2008, the yen appreciated 22% against the dollar and 30% against the euro. For every one-yen increase against the dollar, Toyota loses $450 million in operating profits and Honda $200 million. While it's hard to imagine things are much different at Canon (NYSE:CAJ), I do believe there exists five good reasons to invest in the digital camera maker at this time. (Read how the relationships between pairs can help control risk exposure and maximize profits in Using Currency Correlations To Your Advantage.)

No. 1: Much Better Balance
Ten years ago, Canon was principally a maker of photocopiers. Its business machines division generated 83% of its total revenue, while cameras represented less than 10% of that number. Fast-forward 10 years and cameras now account for almost 26% of Canon's overall revenue. Add in another 10% from its optical division, which makes aligners for LCD panels and steppers for semiconductors, and you have a business that is better prepared to withstand a lengthy global downturn.

No. 2: Financials Strong Despite Drop
In October, Canon revised its sales and earnings projections downward to reflect the appreciation in the yen. It felt revenues for the entire year would be $40.9 billion with net income around $3.6 billion. That's decreases of 5.2% and 23.2% respectively in 2008. While this isn't what any board wants to hear at the annual meeting, they are still very good results in light of incredibly difficult business conditions. In fact, its annual revenues should be the second highest in company history (2007 was higher) and net income will be close to matching last year's record results as well. (Learn more in our Financial Statements Tutorial.)

No. 3: Growth Continues
A sign of a good company in my opinion is one that consistently adds employees. Canon has added jobs in 10 consecutive years, finishing the third quarter with 148,905 employees worldwide, up from 79,799 at the end of 1998. Sensible human resource policies generally come from sensible management teams. It's nice to see a company that understands the concept of responsible hiring.

No. 4: Award Winning Products
The February issue of Macworld magazine gives two of Canon's products, the Pixma MX850 printer and Eos Rebel XSi camera, ratings of four-and-a-half mice out of five. In addition to Macworld, in early January, Buyers Laboratory Inc. named Canon USA the "Multi-Function-Product Line of the Year." With new high definition camcorders on the market, any accolades from industry sources are helpful.

No. 5: Watch and Wait
Canon's stock hasn't been this low since 2004. Some analysts predict earnings per share (EPS) to drop by half in 2009, generating a forward P/E of 20. If all comes to pass as expected, Canon's stock will drop into the 20s, becoming too good a deal for investors to pass up. Patience has its virtues.

Bottom Line
When a company has as a good product, strong financials and growth potential, as Canon does, investors start to take notice. Add the beaten down stock, and eventually one must recognize that the markets have it wrong. When this occurs, plan for the stock price to make great strides.