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2020 was a year of the “unprecedented”. Pandemic, Unemployment, market volatility, multi-baggers, income disparity, geopolitics etc. I am glad this year is coming to an end and wishing for a better and rather boring 2021.
In terms of trading and investing, what worked? – Almost anything related to Healthcare, Software, Innovation, Chemicals in the 1st 9 months of 2020. – Then came reflation and economic growth related flows in the last two months propelling banks and energy among other sectors. It’s exciting to note that these few months could be a potential turning point against a multi-year downtrend in the energy sector.
Going forward, which sectors are investors focusing on implicitly from recent flows and overall strength? I have done this analysis based on 1) where the stocks within each industry are relative to the overall market (i.e. their relative strength) and 2) to themselves (compared with 50 day volume weighted avg price).
Below is a table showing this for 5 major countries I follow: Japan, HK, China, India, US.
Note: Shaded sectors show an overlap across 2 timeframes in the same country.
One can amend or incline their portfolios in the market’s direction or choose to be a contrarian. Neither is wrong, I prefer the former.
Feel free to reach out for a discussion on companies in the listed sectors.
This is a continuation of last week’s post on sectors showing relative strength. You can check out the first batch of sectors here. Below, I have listed out some interesting names in the remaining sectors (Homebuilding, Recruitment, Entertainment & Mortgages).
Homebuilding:
Sumitomo Forestry (1911.T): consolidating in a tight range post mid-Aug gap up.
Sanei Architecture (3228.T): Power gap up on Friday backed by ~7x volume! I feel buying now would be chasing the move. Better to wait for consolidation for couple of days/weeks.
Human Resources: These are very high beta stocks, so need to exercise a lot of caution. UT Group is ~4x and Outsourcing ~3x from March lows.
UT Group (2146.T): consolidating upwards since Mid-September, think this offers a relatively low risk position if it breaches 3865 on upside.
Outsourcing (2427.T): Good to see some consolidation action last week. Ideally want to get 1-3 more days of tight price action near 1015-1030 which can potentially set it up for another leg up.
Movies and Entertainment:
J-Stream (4308.T): this one is a rocket-ship. Fundamentally, I don’t see how this company can run up so much with not so spectacular growth numbers (see below). Nonetheless, this should be on the list for nimble players out there.
Avex Group (7860.T): Quite a beaten down stock, recently came out of a downtrend around mid-September. Not sure if the recent rally is due to short squeeze or fundamental reasons. Technically, the setup is developing and looks very interesting.
Thrifts and Mortgage Finance:
Aruhi Corp (7198.T): This mortgage financier is on a roll, specially given how financial sector has been beaten down globally.
Charts sourced from investing.comand financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
I have been studying the Japanese equities market over the last few months and have identified sectors that are exhibiting a positive trend. These sectors warrant a closer look as we could find potential outperformers/multi-baggers.
The broad sectors that I see gaining a lot of investor attention over the course of the last 3 months are: – Agricultural & Farm Machinery – Air Freight & Logistics – Automotive Retail – Footwear – Healthcare Services – Homebuilding – HR – Internet + Direct Marketing – Movies and Entertainment – Multi-line insurance – Specialty stores – Thrifts & Mortgage Finance
Looking at these sectors, one can notice that some of these have been strong since Covid hit in early 2020. But quite noticeable are the sectors which indicate re-opening and economic growth. I will explore some of these below and put together a list of good looking stocks in each sector.
I invite you to do the fundamental analysis and help me choose companies with the best prospects:
Agricultural & Farm machinery:
Kubota Corp (6326.T): consolidating since a big run up just before end-Aug.
Yamabiko (6250.T): Notice that this particular company went on racing upwards even though September was a tough month for most equities.
Air Freight and Logistics: It is a global phenomenon that this sector is getting bid up. Logistics is definitely getting a lot of attention (similar to FedEx in US):
SG Holdings (9143.T): looks a bit stretched right now, keeping an eye on this one when levels become interesting.
Maruwa Unyu Kikan (9090.T): I like the technicals on this one, big volume up days vs low volume down days.
Automotive Retail:
Nextage (3186.T): Something seemingly awesome is happening here, big volume buying, making multi year highs. 3x since April 2020! Is that a bit too much for a business that “provides a range of services in the used car business, including sales of car supplies, insurance contracts, vehicle safety inspection, vehicle repairs after accident, and vehicle purchasing”?
Fuji Corp Miyagi (7605.T): pulling back a bit but still looks bullish. A lot of institutions won’t touch this one given it trades only $400k-$500k a day.
Healthcare Services
Elan Corp (6099.T): Very strong price action, long term uptrend. Business: provides services for rental with laundry service of clothes, towels, etc. combined with supply of daily necessities to persons admitted to hospitals and elderly facilities.
Charm Care (6062.T): another company that helps nursing care business. Although technically I feel it requires some consolidation for a better entry.
Alright, that’s 8 companies across 4 different sectors. Will cover the rest in Part 2!
Hope it’s helpful.
Charts sourced from investing.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
SaaS and Cloud are majorly loved themes globally in these times.
So I have put together a list of such companies in Japan for investors in Asia.
Here we go.
Rakus Co (3923.T): Rakus Co., Ltd. provides cloud and IT engineer dispatch services in Japan.
Growing revenues, decent cash flow (although a decline in 2019-2020 YoY). Investors absolutely love it so far. Can be seen from the chart below. Seems like a low risk bet for investors/traders looking for long exposure.
Atled Corp (3969.T): ATLED CORP. develops software solutions in Japan. It offers Agile Works, an enterprise workflow; X-point Cloud, a cloud workflow system; X-point, a workflow system; and ATLED Work Platform, a multi-tenant cloud application platform with a workflow system. The company also provides support services.
Growing revenues, growing earnings, 15%+ ROE since 2015. Extended as of now, but looks good to add to the portfolio on some consolidation.
I did a similar post for China few weeks ago, that can be accessed here.
Charts sourced from investing.com and financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
