Wacom is a global leader in digital pens and related devices.
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When looking for Japanese stocks to buy now, we look for high-quality firms that are under-researched and undervalued, where through our engagement we feel we can unlock significant value. We want to be constructive partners, sharing ideas with management on how to rectify the share-price undervaluation. In our view, low valuations, growing shareholder value and engagement are a powerful combination for generating high returns.
With a market share of almost 60%, Wacom (Tokyo: 6727) is a global leader in digital pens and related computing devices. It is benefiting from the growing adoption of digital drawing and writing. Wacom’s dominant position allows it to be at the forefront of technological innovation, developing solutions that utilise big data, artificial intelligence and virtual reality. Its leading technology is used in Samsung devices: the Galaxy S22 Ultra, launched at the start of 2022, boasts an embedded Wacom pen.
Investors underappreciate the growth potential of Wacom’s technology, but we think that will soon change. We have built a good rapport with management and under the leadership of CEO Nobutaka Ide, Wacom has improved its communication with investors and grown its operating earnings by an annualised 39% since 2018. This growth earns the company a place on our list of the best stocks to buy now. 
T Hasegawa (Tokyo: 4958) is a top-ten global flavour and fragrance (F&F) company. The investment merits of F&F companies are not lost on international investors, with the group’s global peers trading on an average EV/Ebitda multiple of 22 compared with T Hasegawa’s 11. T Hasegawa’s comparatively low EV/Ebitda does not reflect the quality of the business and offers an attractive opportunity in a rapidly growing industry characterised by high customer retention, strong barriers to entry and pricing power.
T Hasegawa has responded positively to our suggestions, and we are excited about the changes under way. The firm has established a new overseas investor relations team and brought in dynamism and fresh perspectives with new appointments. Led by a Western-leaning president intent on changing the conservative managerial culture, T Hasegawa is set for bold new growth.
Shin-Etsu Polymer (Tokyo: 7970) is a listed subsidiary of Shin-Etsu Chemical. It focuses on PVC and silicone-rubber processing. Driven by successful price increases and strong volume growth in its division producing wafer carrier cases (used for storing semiconductor wafers), Shin-Etsu Polymer grew sales and operating profits by an annual 20% and 55% respectively over the last quarter, with a five-year annual operating-earnings growth rate of 12%.
On an EV/EBIT ratio of just 5.7, the stock is a good opportunity to generate attractive returns from a high-quality, growing business – not to mention the prospect of a buyout by its parent company, Shin-Etsu Chemical. That's why we rate it one of the best stocks to buy now in Japan. 
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