RIDING THE JAPANESE BULL

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s Global Bull Market Alert pick — Mitsubishi UFJ (MTU) — is a terrific combination of one of my favorite top-down themes — Japan — with one of my favorite sectors — banking. We’ve already traded MTU for a profit late last year, but the recent pullback in the stock offers us another bite at the apple, and at a price very close to what we bought it for back in October.

Lifted by a rare combination of both consumer spending and corporate investment, Japan’s economy grew 3% in the fiscal year through March. That makes four years of gains in a row. And the news out of Japan keeps getting better: Machinery orders rose by the fastest rate in almost three years in April, and bank lending increased for a fourth straight month in May. Companies are now stepping up to the plate, increasing capital expenditure and hiring. Not since 1990 had corporate spending grown at the rate it did in Q1 of this year. Indeed, if Japan’s expansion continues through November, it will become the longest since World War II.

The banking sector is a great way to play this upturn as its performance has been buoyed by both Japan’s general economic recovery as well as a healthy dose of restructuring. Japan’s "Big Three" — Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui Financial Group — are all newbies to the Japanese banking scene, formed in recent years through mergers. All three have reported very strong results. After writing off non-performing loans that piled up after the stock and real estate price bubble burst in the early 1990s, the banking sector is leading the way in the Japanese recovery.

Exclusive  Global Markets Stumble -- But New Options in “China's Twitter” Soar 57%

MTU is the giant among the Japanese "big three." Already the world’s largest bank by assets, it recently leapt from #82 to #18 on the FT Global 500 list of top global companies. And it keeps going from strength to strength: On May 22, it announced that its net profit skyrocketed to 1.18 trillion yen ($10.57 billion) — a breathtaking recovery from the combined 216.1 billion yen in losses suffered jointly last year by Mitsubishi Tokyo Financial Group and UFJ Holdings, the banks that merged to form MTU last year. And non-performing loans fell 1.26% from the two groups’ total last year.

MTU’s results beat expectations on all fronts. Unusually, MTU is also enjoying balanced growth in its retail banking, corporate banking and asset-management businesses. As a final sign of its full recovery, MTU has just paid back the last of the public finds its predecessors had received in the 1990s.

So buy Mitsubishi UFJ (MTU) at market today, and place your stop at $10.30. For a potentially bigger upside, buy the November $12.50 call options. (MTUKV.X).

PORTFOLIO UPDATE

Our holding Nokia (NOK) has announced that it will combine its mobile-network operations with Siemens’ network to create a joint venture with annual revenue of about $20 billion. This is a savvy move on Nokia’s part, and it sent the company’s shares up 3% in European trading today.

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Looking at the investment markets around the world, I see a lot of terrific opportunities emerging across a wide range of sectors. But with stocks experiencing a lot of volatility and heading into what is historically a directionless season for the market, let's review our current picks, based on are our strongest Global Bull Market themes -- deep value, best of breed, outsourcing, and commodities.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE