With this morning's news that Toyota Motor Corp. (NYSE: TM) expects to lose $5 billion in its current fiscal year -- three times more than the $1.6 billion loss it originally predicted, this would hardly seem to be the time to be thinking about investing in Japan. Toyota recently built expensive new factories which now sit idle and it has lost its AAA rating. With this Japanese leader in trouble, why would you consider investing there?
If you think Toyota will survive the current financial crisis, then today's announcement provide an opportunity to own the shares at a half off the price you could have gotten it for a year ago. And here are two other stocks to consider -- one which is doing extremely well and another which is likely to do well when things recover:
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Nippon Telegraph and Telephone (NYSE: NTT) looks like a winner. It just reported a 69% increase in profit from its mobile communication unit, NTT DoCoMo Inc., and the data communication and computer system development unit, NTT Data Corp., contributed most to the NTT group's profit growth. And at a P/E of 7, the stock looks inexpensive.
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Wacoal Holdings Corp ADR (NASDAQ: WACLY). Although it lowered its forecast for earnings, this maker of intimate apparel has 80% market share so the lower stock price may be an opportunity to purchase the shares at a discount of a company that will likely do well when the economy recovers. However, there could be bad news in the near term. Wacoal lowered its 2009 outlook due to the worldwide economic crisis, the rise in the value of the yen, as well as the slumping stock market. Analysts expect it to report full-year revenue of $1.95 billion, operating profit of $126 million and net profit of $64.7 million.
The risk of buying now is clear -- things could get worse and you would be sitting on a loss. But if you think that the economy will recover, these stocks could be classic opportunities to get in at a lower price and profit from a recovery.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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