In this article, we will take a look at the 12 Best Japanese Stocks To Buy in 2025.
As the dangers of natural disasters increase and the expenses of social security continue to rise, the International Monetary Fund says Japan has to take quick action to strengthen its fiscal situation. The IMF’s warning comes as Japan increases spending to meet a wide range of requirements, from initiatives to improve the birth rate to strengthening national security. This occurs concurrently with its borrowing costs gradually increasing due to rate rises by the Bank of Japan in the past year. Japan already has the highest amount of public debt of any major country. According to a Finance Ministry estimate released this January, the nation’s debt payment expenses are expected to increase by 25% by fiscal year 2028 compared to the previous year, assuming a 3% annual economic growth rate and 2% inflation. Overall, the IMF forecasts that Japan’s public debt will be 232.7% of GDP this year. In addition, at its January 24 meeting, the Bank of Japan voted to boost interest rates to 0.50%, the highest level in seventeen years. The current approach comes after decades of the BOJ’s efforts to normalize interest rates. Despite the increasing balance sheet risk, the bank may be pushed to hike interest rates further if it observes a “virtuous cycle” of rising prices and rising wages, with board member Naoki Tamura stating that raising short-term interest rates to “at least around 1%” by the second half of fiscal year 2025 is “necessary”.
According to a Statistics Bureau of Japan estimate, average household expenditure in Japan in December was 352,633 yen ($2,332), up 7% in nominal terms from the previous year. In addition, Reuters revealed that Japanese household spending rose year-over-year in December 2024 for the first time in five months, and at a far faster rate than expected. However, the Japanese government notes that it was premature to call a bottoming out in the decreasing trend in consumption. Consumer expenditure also grew 2.7% in the same month compared to the previous year, above the median market forecast of 0.5% growth.
Japan-U.S. Summit Meeting
The current environment around Japanese markets is one of concern and relief, especially after U.S. President Donald Trump announced tariffs on steel and aluminum imports. Trump’s threats to impose retaliatory tariffs on “everyone” have served as a harsh reminder of the dangers that all of America’s trading partners, including Japan, face. With Trump aiming to reduce his country’s trade imbalance with Japan, Japanese Prime Minister Shigeru Ishiba pledged to purchase more American LNG and disclosed plans for manufacturers such as Toyota and Isuzu Motors to invest more in the United States at their summit meeting on February 7. Homin Lee, senior macro strategist at Lombard Odier in Singapore, had the following to say about the meeting:
“The friendly tone and substance of the summit, especially in regard to Japan’s high profile investment in the U.S. steel sector, should provide a modest relief to Japanese investors.”
Pixabay/Public Domain
Our Methodology
For this list, we compiled a list of US-listed Japanese stocks using stock screeners. We then chose the best Japanese stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 900 elite hedge funds tracked as of the end of the third quarter of 2024. The list is arranged in ascending order of the number of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12. Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF)
Number of Hedge Fund Holders: 1
Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF) is a retail and wholesale firm that specializes in Japanese beauty, health, luxury, and technology items, with locations in Hong Kong, Japan, North America, and the United Kingdom.
According to Tokyo Lifestyle’s most recent financial results for the first half of fiscal year 2025, revenues rose by 32.1% to $98 million, while income from operations increased by a notable 867.8%. The figures highlight the significant contributions made by franchise sites and wholesale clients, whose revenue climbed by 53.8% to $86.9 million. That said, the company had to contend with a drop in revenues from its directly operated physical and online stores. On the other hand, the company displayed great cost management by cutting operating expenditures by 2.2% despite a 32.7% increase in revenue costs.
According to Insider Monkey’s third-quarter database, 1 hedge fund was positive on Tokyo Lifestyle Co., Ltd. (NASDAQ:TKLF).
11. TOYO Co., Ltd. (NASDAQ:TOYO)
Number of Hedge Fund Holders: 1
TOYO Co., Ltd. (NASDAQ:TOYO) engages in the design, manufacture, and sales of solar cells and modules. The company is known for integrating the upstream manufacturing of wafers and silicon, the midstream manufacture of solar cells, and the downstream production of photovoltaic (PV) modules.
In late 2024, TOYO Co., Ltd. (NASDAQ:TOYO) stated that it had struck a $150 million agreement to supply high-efficiency solar cells to a prominent solar module manufacturer. According to the agreement, TOYO will offer cutting-edge solar cells to assist the customer’s expanding solar module production in the United States and India.
A day earlier, the company announced an agreement to acquire all membership interests in Houston-based Solar Plus Technology Texas LLC. The facility is expected to begin producing 1 GW by the middle of 2025. Production capacity is expected to increase to 2.5 GW by the end of 2025 in anticipation of a strong order backlog from U.S. clients.
According to Insider Monkey’s Q3 database, 1 hedge fund was positive on TOYO Co., Ltd. (NASDAQ:TOYO).
10. Linkage Global Inc. (NASDAQ:LGCB)
Number of Hedge Fund Holders: 1
Linkage Global Inc. (NASDAQ:LGCB) is a development company that provides cross-border product sales, digital marketing services, e-commerce operations training, and software support in Japan, Hong Kong, and China.
Linkage Global’s recent fiscal 2024 results show a 19.19% decrease in total revenues to $10.29 million from $12.73 million in the year prior. Despite the lower revenue, gross profit increased by 123.91% to $4.17 million, attributable mostly to the launch of new fully managed e-commerce operational services in April 2024, which generated $3.28 million in revenue at an 89.62% gross margin. On the other hand, cross-border sales declined by $4.11 million, with the Japanese subsidiary seeing a 53.12% drop due to the yen depreciation.
According to Insider Monkey’s third quarter database, 1 hedge fund was long Linkage Global Inc. (NASDAQ:LGCB).
9. ORIX Corporation (NYSE:IX)
Number of Hedge Fund Holders: 5
ORIX Corporation (NYSE:IX) provides a wide range of financial services throughout Japan, the United States, Europe, Australasia, and the Middle East. The company operates in several divisions, including Real Estate, Corporate Financial Services and Maintenance Leasing, Environment and Energy, and others.
On February 10, 2025, ORIX Corporation (NYSE:IX) reported its consolidated financial results for the nine months ended December 31. The results revealed a 5.4% increase in total sales to JPY 2,154,484 million and a 24% increase in net income attributable to shareholders compared to the previous year.
On January 31, ORIX Corporation (NYSE:IX) stated that it would begin delivering renewable power to Kansai International Airport and Osaka International Airport under a power purchase agreement on February 1, with the company installing a solar plant and a rooftop system atop the international cargo facility at Kansai International Airport, with a total capacity of around 22.8 MW. According to ORIX Corporation (NYSE:IX), these solar systems are predicted to provide the most electricity at the country’s airports.
8. Mizuho Financial Group, Inc. (NYSE:MFG)
Number of Hedge Fund Holders: 11
The parent company of Mizuho Bank, Mizuho Financial Group, Inc. (NYSE:MFG) is a bank holding company that offers retail banking, corporate banking, investment banking, and asset management services.
Mizuho Financial Group, Inc. (NYSE:MFG) reported a notable increase in key financial measurements in its earnings report for the third quarter of 2024. The company’s ordinary income climbed by 14.8% to JPY 7,073,521 million, ordinary profits increased by 27.6% to JPY 1,126,538 million, and profit attributable to parent shareholders increased by an impressive 33.1% to JPY 855,374 million. In addition, Mizuho’s earnings per share grew from JPY 253.41 in the previous year to JPY 337.64.
Mizuho Financial Group, Inc. (NYSE:MFG) took a minority stake in Golub Capital, a U.S private lending company, back in late 2024. With this move, Mizuho will not only strengthen its place in the credit markets business in the U.S., but also become the first shareholder of a private credit asset management firm in the country.
According to Insider Monkey’s database for Q3 2024, 11 hedge funds held a stake in Mizuho Financial Group, Inc. (NYSE:MFG).
7. Honda Motor Co., Ltd. (NYSE:HMC)
Number of Hedge Fund Holders: 11
Honda Motor Co., Ltd. (NYSE:HMC) is a multinational firm involved in developing, manufacturing, and selling various automobiles and power products that operates through four segments: bikes, vehicles, financial services, and power products. The company was recently in negotiations with Nissan about merging by 2026, intending to create one of the world’s largest automakers based on sales. However, the discussions fell apart when Honda Motor Co., Ltd. (NYSE:HMC) asked that Nissan accept a fresh offer to become a fully owned subsidiary, departing from the originally agreed-upon structure of a joint holding company.
Honda Motor Co., Ltd. (NYSE:HMC) stated on January 29 that it will invest $300 million in three automobile plants in Ohio to build gas-powered, hybrid, and electric vehicles on the same production line. In 2022, the Japanese automaker claimed that it would invest $700 million in three plants; however, that figure has already been increased to $1 billion. In addition, as part of the Honda EV Hub in Ohio, Honda Motor Co., Ltd. (NYSE:HMC) and LG Energy Solution are building a joint venture battery factory in Ohio for a total investment of $4.4 billion.
According to Insider Monkey’s third quarter database, 11 hedge funds held stakes in Honda Motor Co., Ltd. (NYSE:HMC)), compared to 12 in the prior quarter.
6. Takeda Pharmaceutical Company Limited (NYSE:TAK)
Number of Hedge Fund Holders: 12
Takeda Pharmaceutical Company Limited (NYSE:TAK), a global pharmaceutical firm, conducts research, development, manufacturing, marketing, and out-licensing of pharmaceutical products. The company focuses on a wide range of therapeutic areas, including cancer, uncommon illnesses, and gastrointestinal.
Takeda Pharmaceutical Company Limited (NYSE:TAK) has upgraded its fiscal year 2024 financial estimate, anticipating a 2.5% increase in revenues to JPY 4,590.0 billion on account of favorable foreign exchange rates, strong business growth, and slower generic erosion of VYVANSE in the United States. It is expected that net profit will improve by 73.5% to JPY 118 billion while operating profit will rise by 29.8% to JPY 344 billion.
According to Insider Monkey’s Q3 database, 12 hedge funds were bullish on Takeda Pharmaceutical Company Limited (NYSE:TAK), an increase from 10 funds in the last quarter. Israel Englander’s Millennium Management is the leading stakeholder of the company.
5. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG)
Number of Hedge Fund Holders: 13
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) is a well-known Japanese financial company with a global presence, providing a variety of services such as banking, leasing, securities, and consumer financing.
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) announced a significant rise in earnings for the nine months ended December 31, with ordinary income climbing by 14.4% and profit attributable to owners increasing by 43.3% over the previous year. This gain could be ascribed in part to the company’s strategic stock split and share repurchase, both of which have increased profits per share. With the addition of JRI Holdings Limited as a new consolidated subsidiary, SMFG hopes to improve its market position further.
Furthermore, in order to broaden its client experience, the company has formed a number of alliances with other companies to enhance the effect of technology and human resources. As an example, SMFG announced a partnership with Euphoria Co. back in November to assist businesses in improving their human capital management systems.
At the end of Q3 2024, 13 hedge funds were bullish on Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG), the same as the prior quarter.
4. Nomura Holdings, Inc. (NYSE:NMR)
Number of Hedge Fund Holders: 15
Japan’s largest investment bank and a global leader in wealth management and financial services, Nomura Holdings, Inc. (NYSE:NMR) offers several services globally across three segments: retail, investment management, and wholesale.
Nomura Holdings, Inc. (NYSE:NMR) recently announced a decent increase in earnings, above analysts’ expectations. The company’s investment banking income increased by 14%, while its pretax profit from overseas nearly quadrupled to JPY 51.8 billion, with gains made across all areas. In addition, Nomura’s domestic wealth management branch recorded a 13% growth in revenue for the eighth consecutive quarter.
According to Hideyasu Ban, a senior analyst at Bloomberg Intelligence, the company’s fixed-income revenue climbed 35% and its equity revenue gained 45%, both of which were above the average performance of the five biggest US banks.
3. Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG)
Number of Hedge Fund Holders: 18
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), one of Japan’s largest banking institutions, is a bank holding company that operates through a number of segments, including Digital Service, Retail & Commercial Banking, and Japanese Corporate & Investment Banking, among others.
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) posted a 32% increase in quarterly net profit on February 4. This gain was fueled by cross-shareholding sales and profit increases when interest rates in Japan rose. Profit from October to December totaled JBY 490.74 billion, a massive increase above the JBY 370.64 billion reported a year earlier.
Following these results, DBS analyst Lim Rui Wen maintained a Buy rating on MUFG with a price target of JPY 2,150. The Bank of Japan’s normalization of monetary policy is only one of several factors projected to boost MUFG’s growth and profitability, along with an increase in domestic lending operations and spreads.
Insider Monkey’s data revealed that 18 hedge funds held stakes in Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) as of the end of fiscal Q3 2024.
2. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 18
Toyota Motor Corporation (NYSE:TM), the world’s largest carmaker in terms of sales volume, designs, produces, assembles, and distributes passenger cars, minivans, commercial vehicles, and associated parts and accessories worldwide.
Toyota Motor Corporation (NYSE:TM) saw its operating profit fall roughly 28% year-on-year in the third quarter that ended December 2024. Toyota’s operating profit fell for the second straight year, following a 20% drop in the preceding quarter. However, net income attributable to the company increased to 2.19 trillion yen from 1.36 trillion yen the previous year. In addition, the company maintained its full-year dividend prediction at 90 yen, up from 75 yen last year, while increasing its operating income forecast by 400 billion yen to 4.7 trillion yen for the fiscal year.
Moreover, the company plans to build a completely owned firm in Shanghai to research and manufacture electric vehicles and batteries for the Lexus brand, with production scheduled to begin in 2027. Toyota Motor Corporation (NYSE:TM) claimed the unit will create a new Lexus EV with an initial manufacturing capacity of roughly 100,000 units per year.
As of Q3 2024, 18 hedge funds held stakes in Toyota Motor Corporation (NYSE:TM), up from 14 in the previous quarter.
1. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 21
Sony Group Corporation (NYSE:SONY) is a Japanese global company with a wide portfolio that includes electronics, gaming, entertainment, and financial services. The firm uses technical innovation, as well as the appeal of its intellectual assets, to drive growth in its main segments.
On January 29, Citi analyst Kota Ezawa confirmed his neutral rating on Sony Group Corporation (NYSE:SONY), keeping a price target of JPY2,800. The statement comes following Sony’s announcement of a shift in its management structure, which will take effect on April 1. Sony revealed its new management team, with Hiroki Totoki, the current president, COO, and CFO, taking on the role of CEO. This is seen as a potentially pivotal move, with the new CEO expected to drive additional development in electric cars.
For the first quarter of fiscal year 2025, Sony Group Corporation (NYSE:SONY) reported a 2% increase in revenues and a 6% increase in net profit. Sony’s adjusted EBITDA increased by 42% year-over-year despite a 22% drop in PlayStation 5 sales, thanks to higher-than-expected sales of third-party titles.
According to Insider Monkey’s data, 21 hedge funds held stakes in Sony Group Corporation (NYSE:SONY) as of the end of Q3 2024.
Aristotle International Equity Strategy stated the following regarding Sony Group Corporation (NYSE:SONY) in its Q4 2024 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of videogames and consoles, image sensors, music, and movies, was a top contributor for the period. The company reported strong results driven by third-party gaming revenue and record PlayStation 5 console profitability. This was achieved despite lower console sales, which, in our view, exemplifies the strength of PlayStation’s network effects. PlayStation is the world’s largest gaming platform with 116 million monthly active users, making it an attractive market for game developers and allowing users to play the most advanced games at lower costs than PCs. In its Pictures segment, Crunchyroll (the anime business Sony acquired from AT&T in 2020) signed a distribution agreement with YouTube Primetime Channels, the market share leader in streaming services, which we believe will increase Crunchyroll’s subscriber base. Though a singular example, it illustrates management’s ability to better execute and further improve the segment’s profitability, a catalyst we previously identified. In addition, Sony reported improved sales of image sensors for mobile products as the global smartphone market continued its gradual recovery. Sony’s image sensor business has the largest global market share, and we believe, longer term, it is uniquely positioned to benefit from increasing demand for both autonomous driving technology in vehicles and improved image quality in smartphone cameras. As such, we continue to admire Sony’s capacity to build on its industry leadership and optimize its operations, which includes its plan for a partial spinoff of its Financial Services segment in October 2025.”
While we acknowledge the potential of SONY, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SONY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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