Japan’s stock market had a roller-coaster ride last week, but Goldman Sachs sees several opportunities in the country, naming the “stocks to own” right now. It comes after Japan’s broad-based Topix index plunged 12.23% on Aug. 5 and the benchmark Nikkei 225 index fell 12.4% — its worst decline since 1987’s “Black Monday.” Both indexes have since recouped some losses, with the Topix ending the week down 2.14% and the Nikkei ending 2.46% lower. In a note on Aug. 7, Goldman’s analysts revealed a number of top picks, including three buy-rated Japanese stocks with over 40% upside potential over the next 12 months. The names are also on the bank’s conviction list which captures its top buy-rated stock ideas that it expects to beat the market. All three picks are listed on the Tokyo Stock Exchange and also trade as American Depository Receipts in the U.S. Asics Corporation Goldman is bullish on sportswear company Asics Corp , highlighting the strength of its brand. The company is known for its performance running shoes, athletic wear and sneaker brand Onitsuka Tiger. Analyst Sho Kawano said he expects Asics’ profit to improve on the back of “spillover effects to other Asics shoe categories from strong performance running sales.” Year-to-date, Asics shares are up 99.5%. Goldman has a target price of 3,100 Japanese Yen ($21.07) on the stock, giving it around 50% upside potential at the time of the note. Suntory Beverage & Food Goldman describes Suntory Beverage & Food as a “major Japanese soft drinks manufacturer with the second-largest market share in Japan,” as well as operations in Europe, the U.S. and other parts of Asia Pacific. Analyst Takashi Miyazaki expects the company’s profits to grow at a compound annual growth rate of 10% in the next three years, in large part due to its focus on core brands and a peak in raw material costs. Shares in Suntory are currently “undervalued,” Miyazaki said. Year-to-date, its shares are up 3.5%. Goldman has a target price of 6,900 Japanese Yen on the stock, or 37% potential upside. Hitachi Also on Goldman’s list is conglomerate Hitachi which operates in industries ranging from power and renewable energy to railway services and healthcare products. The bank’s analyst Ryo Harada is now looking forward to the “next phase” of the company’s growth. “We are Buy-rated on Hitachi, as we expect the company to enter a period of multiple expansion that is not constrained by the historical range, driven by higher corporate value on the back of EPS [earnings per share] expansion and growth in the services business,” he added. Shares in Hitachi are up close to 60% year-to-date. Goldman has a target price of 4,850 Japanese Yen on the stock, giving it around 54% upside potential at the time of the bank’s note. — CNBC’s Michael Bloom contributed to this report.
