The recent large downward move in the Japanese yen has the potential to seriously benefit Japan's exporters. As the Bank of Japan continues its easy monetary policy with low interest rates and significant asset purchases, the Japanese yen has suffered and has further room to fall. Japan has taken a clear step to stimulate the economy with its 10 trillion yen asset purchase plan, announced last month. There is also potential for further economic stimulus in Japan. Japanese automobile companies that do a large part of their business overseas should benefit from this trend. The two companies listed in this article are both Japanese automobile companies with market capitalizations of at least $40 billion, dividend yields of at least 1.46% and trading for less than 18x TTM earnings. This list is meant as a base for further research.
Toyota Motor (TM)
Market Cap: $149 Billion
Dividend Yield: 1.46%
TTM PE: 17.28x
Toyota is one of the world's largest car companies and has been steadily growing profitability in recent years. Toyota is known worldwide for its high quality and reliable vehicles such as the Toyota Prius and the Toyota Corolla. Additionally, the Lexus and Scion car brands operate as subsidiaries of Toyota. The company is guiding that it will sell approximately 8.75 million vehicles worldwide in fiscal year 2013, ending in March. In the first six months ending September 30, 2012, Toyota was able to grow revenue by 45.8% while growing net income by a staggering 537.2% to over 316 billion yen (Using Japan GAAP), when compared with the same six months in the prior year. Of course, the prior year was tremendously influenced by the ill effects of the devastating Tsunami in Japan in March of 2011. The company has been able to undertake a massive turnaround over the past few years in the face of macroeconomic headwinds. Toyota is now guiding to make 780 billion yen (U.S.$8.87185) in net income in the fiscal year ending in March of this year. This would be a tremendous increase over the 283.5 billion yen that the company reported in net income in the prior year. The stock has done very well recently and is up by more than 37% over the past 52 weeks. Despite its recent run-up in share price, Toyota is still well positioned for a successful year, especially with the currency tailwind created by the Bank of Japan.
Nissan Motor (NSANY.OB)
Market Cap: $40 Billion
Dividend Yield: 2.97%
TTM PE: 10.48x
Nissan Motor is also a leading global auto manufacturer. The company is known for its eponymous brand, selling vehicles such as the Altima and the Murano in the United States. The company has aggressive plans, as it is targeting to control 8% of the global automobile market by FY2016. In the first half of FY2012, the company was able to grow volume by 11.3% globally compared with the same period a year earlier. According to company guidance on November 6, 2012, the company is set to sell 5.08 million units worldwide in FY2012, which represents 4.9% growth over the previous year. Additionally, according to this guidance, the company is expecting a small drop in net income, bringing this figure to an expected 320 billion yen for the year. Additionally for FY2012, the company is planning a total dividend payout of 25 yen per share, which represents a 25% increase in total payment from the previous year. Nissan's stock has traded up by slightly less than 10% in the past 52 weeks. This company should benefit in the near term from the benefits it should realize from a lower yen.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.