Just after the earthquake, tsunami, and nuclear crisis unfolded in Japan, I wrote about some stocks and ETFs that could benefit from the changing headlines in Japan. You can read that article here. Every single stock and ETF mentioned in that article is higher now. That shows how quickly the headlines went from doom and gloom to what is now an overly optimistic outlook on Japan. The cover of Barron's this week was "Buy Japan". Some are even calling this the buying opportunity of a lifetime. See where famed investor Marc Faber says those words.
Everyone is in such a rush to be a contrarian these days that a massive tragedy, with huge economic consequences, has been viewed by some as a huge buying opportunity without much thought. The Nikkei Index in Japan is not down enough to be called the buying opportunity of a lifetime, nor was it ever, even at the lows of the crisis. The economy in Japan has taken a huge hit, and even though there will be massive stimulus from the Japanese government, and an influx of money from insurers, this event is still a net negative in my opinion.
The buying opportunity of a lifetime probably just happened for most of us when the Dow was about 6,500 and stocks like Ford (F) and Wells Fargo (WFC) were trading for a few bucks. Japan might be a good buy in the long term, but not because of this recent crisis as many believe. For investors who made profits in the names I wrote about, the easy money has probably been made for now. Take a look at the stock charts below which will show you the dip was shallow and the rebound was too swift.
Posco (PKX) was trading at $105.11 when I wrote my last article, and today it is $112.45. Posco is one of the leading steel companies in South Korea. PKX earnings estimates are over $11.44 per share in 2011. This puts the P/E ratio at about 8 which is low for one of the leading steel companies. The balance sheet is strong and the book value is listed at $89.68.
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Singapore iShares ETF (EWS) shares were trading at $12.59 when I wrote my last article, and today it closed at $13.24. This ETF invests in a variety of companies that are based in Singapore. These companies should see significant demand for products to help rebuild Japan. These shares traded as high as $14.56 in the past year and the low is $10.47.
Japan iShares ETF (EWJ) shares were trading at $9.65 when I wrote my last article, and today it closed at $10.57. This ETF invests in a variety of companies that are based in Japan, which would be a direct play on the rebound. These shares traded as high as $11.63 in the past year and the low is $9.15.
Toyota Motor Co. (TM) shares were trading at $80.41 when I wrote my last article and today it closed at $82.14. Toyota is a leading auto, truck and forklift maker which should eventually see a surge in demand. These shares have a 52 week high of $93.90 and the low is $67.56. Estimates for TM are about $2 per share in 2011.
Look at some of these other Japan related stocks, and you can see the charts look much more like a minor correction rather than a "buying opportunity of a lifetime".
Here is Honda (HMC):
Here is Sony (SNE) which has only corrected back to around the 200 day moving average:
Here is the heavy machinery maker Kubota (KUB) which is now above the 50 and 200 day moving average, which would not make this the "buy of a lifetime".
The data is sourced from Yahoo Finance and Stockcharts.com.