The Japanese stock market has recovered from last week’s sell-off and investment firm Bernstein sees promising prospects ahead, recommending a special trading strategy and naming overweight stocks. Japan’s broad-based Topix index plunged 12.23% on August 5 and the benchmark Nikkei 225 index lost 12.4% – the worst decline since ‘Black Monday’ in 1987. Both indices have since recovered some losses, with the Topix and Nikkei closing 2.83% and 3.45% higher respectively on Tuesday. Referring to past crises, analyst Rupal Agarwal noted that “the near-term market bottom may have been reached; and the recent dovish commentary from the BOJ (Bank of Japan) is likely to stall the forced carry winds.” “The sharp correction has provided a great opportunity for long-term investors to add Japan back as the structural story was never broken. However, given overall macroeconomic and political uncertainty, rising equity risk premiums and weakening trends in earnings revisions, we expect markets to remain volatile,” she added in an Aug. 8 research note. Below are four stocks from the investment bank’s defensive arm that are listed on the Tokyo Stock Exchange. They also trade as American Depository Receipts in the U.S. All feature significant upside potential, according to FactSet’s consensus price targets. Shares are trading at a “sharp discount.” Among the names on the bank’s screen is video game maker Nintendo. It made headlines after revenue and profit slumped in its fiscal first quarter as sales of its aging Switch console fell. Nintendo shares plunged after the announcement but are still up 5.3% year to date. According to FactSet data, 14 of the 25 analysts covering the stock recommend buying or overweight, eight recommend holding and three recommend underweight or selling. The stock’s average price target is 7,750 Japanese yen ($52.5), implying upside potential of about 19%. Other companies that appeared on the radar include video game maker Capcom, electronics maker Keyence Corp and entertainment company Bandai Namco Holdings. Analysts on average give Capcom upside potential of over 19%, Keyence nearly 24% and Bandai Namco 22.5%, according to FactSet. — CNBC’s Michael Bloom, Charmaine Jacob and Arjun Kharpal contributed to this report.
:max_bytes(150000):strip_icc()/NVDAChart-ffa0f50152824ca98afb9e784d904d0c.GIF "Watch these Nvidia stock price levels as it makes a strong recovery from recent lows")
