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The Yen Might Be Weakening
Written by Danny GuttridgeThe U.S. dollar received some support after a few disappointing economic reports from a weakening yen. The cause of the yen's drop was due to a swing back to a trade deficit for the country, and might be facing further depreciation, according to MarketWatch.
Some analysts said that even after the slight recovery from a decline last month, the yen's threat of depreciation can't be ruled out. The Bank of Japan is expected to continue talks of monetary easing, but speculative investors are positioned for a weak yen. Those bets could be poised to pay off.
Kapitall quoted Neil Hennessy this week about the position of Japan's economy, also mentioning that Japan still has the world's strongest currency. He said the average person in Japan has $75,000 in savings because they're waiting for inflation to reverse. If the yen weakens, consumers will spend more.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.
Business Section: Investing Ideas
With a lower yen value, consumers will likely pick up spending. Below is a list of Japanese companies that are more profitable than their peers. Do you think they will take advantage of the potential spending?
1. NTT DOCOMO, Inc. (NYSE:DCM): Provides wireless telecommunications services, packet communications services and satellite mobile communications services in Japan. Market cap is at $72.90B. TTM gross margin is at 63.01% versus the industry average at 58.52%. TTM operating margin is at 20.13% versus the industry average at 19.03%. TTM pretax margin is at 19.67% versus the industry average at 13.39%.
2. Canon Inc. (NYSE:CAJ): Through its subsidiaries, manufactures and sells network digital multifunction devices (MFDs), plain paper copying machines, laser printers, inkjet printers, cameras and lithography equipment primarily under the Canon brand in the Americas, Europe, Asia and Oceania. Market cap is at $61.74B. TTM gross margin is at 56.17% versus the industry average at 52.41%. TTM operating margin is at 10.63% versus the industry average at 9.82%. TTM pretax margin is at 10.53% versus the industry average at 9.17%.
3. Nissan Motor Co., Ltd. (OTCBB:NSANY): Engages in the manufacture and sale of automotive products, industrial machinery and marine equipment primarily in Japan, North America and Europe. Market cap is at $41.70B. TTM gross margin is at 23.17% versus the industry average at 23.01%. TTM operating margin is at 5.73% versus the industry average at 3.63%. TTM pretax margin is at 4.77% versus the industry average at 4.59%.
4. Makita Corp. (Nasdaq:MKTAY): Manufactures and sells a range of electric power tools worldwide. Market cap is at $5.56B. TTM gross margin is at 41.73% versus the industry average at 32.14%. TTM operating margin is at 16.49% versus the industry average at 13.98%. TTM pretax margin is at 15.9% versus the industry average at 11.96%.
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Kapitall's Danny Guttridge does not own any of the shares mentioned above. Profitability data sourced from Fidelity. All other data from Finviz.
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