We recently compiled a list of the 12 Best Japanese Stocks To Buy in 2025. In this article, we are going to take a look at where Sony Group Corporation (NYSE:SONY) stands against the other Japanese stocks.
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.”
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).
A team of content creators using the latest devices and software to produce high-quality animation and motion pictures.
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.”
Overall SONY ranks 1st on our list of the best Japanese stocks to buy. While we acknowledge the potential of SONY as an investment, 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.
Disclosure: None. This article is originally published at Insider Monkey.
