This week, Mike and Emmet head to Japan in search of overlooked growth stocks.
Japan is home to some of the world's oldest businesses, with more than 140 companies claiming histories of over 500 years. Many of them have survived by following two simple rules: hold plenty of cash and avoid debt. But after decades of economic stagnation, a new wave of corporate reforms is pushing Japanese businesses to become more growth-oriented and shareholder-friendly.
To uncover some of the market's most promising opportunities, Emmet screens the entire Japanese stock market for companies with market caps below $20 billion, strong returns on equity, high returns on invested capital, and rapidly accelerating revenue growth.
One company that stands out is Sanrio (8136.T), the owner of some of Japan's most recognizable intellectual property. Despite growing revenue at an impressive pace in recent years, its valuation has actually become cheaper relative to its historical averages—a combination investors rarely get to see.
Mike then pitches his favorite company of the bunch: Smaregi (4431.T), a fast-growing software business often described as Japan's answer to Square. While countries like China and South Korea have embraced digital payments, Japan remains surprisingly dependent on cash. As the country pushes toward a cashless future, Smaregi's point-of-sale and merchant software platform could be perfectly positioned to benefit.
The pair also explore VRAIN Solution (135A.T), an AI-powered manufacturing software company helping factories automate quality control and safety inspections, ANYCOLOR (5032.T), one of the most unusual media businesses you'll ever encounter, and BuySell Technologies (7685.T), a fast-growing platform capitalizing on Japan's booming second-hand luxury and collectibles market.
Finally, Emmet shares his favorite idea from the entire list: OneCareer (4377.T), a founder-led recruitment and career platform that combines elements of LinkedIn, Glassdoor, and SaaS software. With revenue growing more than 40% annually and returns on equity continuing to climb, it could be one of the most compelling small-cap growth stories in Japan today.
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00:00 Intro
01:02 The Japanese Stock Market
10:37 Sanrio Breakdown
15:08 Smaregi’s Cashless Wave
26:32 Vrain AI Factories
30:22 ANYCOLOR VTuber Empire
34:37 BuySell Technologies
37:14 OneCareer HR Data SaaS
