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Holding Up Well In A Tough Market
Regular readers of my articles on ITOCHU Corp. (OTCPK:ITOCY)(OTCPK:ITOCF) know that I often justify its premium valuation to other Japanese trading
Itochu: Worth A Little More For Diversification
Summary
- ITOCHU's diversification in non-resource businesses and high return on equity justify its premium valuation and help it withstand weak commodity markets.
- FY 2025 saw a profit hit from commodities, but non-resource growth and one-time gains kept profits steady; FY 2026 forecasts modest profit growth.
- ITOCHU's conservative forecasting includes buffers for potential losses, positioning it well for FY 2026 despite commodity and forex headwinds.
- Despite a premium valuation, ITOCHU remains a Buy due to its strong growth prospects and resilience in challenging market conditions.
I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I prefer to hold positions for the long-term unless there is a compelling reason to sell. I look for investment opportunities without regard to asset class, market cap, sector, or yield. I would rather maximize total return over time by buying when price is low relative to intrinsic value.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of ITOCY, MITSY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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