Some people like to bitch about the crafty Nips who are manipulating their currency again. Other people like to cash-in on sudden swings in currency valuations. If you are of the second kind, then Reuters recommends a look at formerly beaten-down stocks of Japanese carmakers who nearly went under during years of unfettered appreciation of the ¥en.
Reuters recommends a look at “Mazda Motor Corp and Fuji Heavy Industries Ltd that are best placed to benefit from the weakening yen, raising their earnings forecasts as exported goods bring in more cash.” True, if you look for a quick trade, those two promise wild swings, simply because they are the most exposed to the currency. According to Reuters,
“Mazda makes 71 percent of its vehicles in Japan and exports about 80 percent of them, while Fuji Heavy makes about three-quarters of its cars at home, shipping about 67 percent of those.”
Both shares are a reverse proxy for the yen and already had quite a run-up as the yen cheapened. According to Reuters, “Mazda stock is the best-performing among Japanese automakers in the past three months, jumping 167 percent, followed by Fuji Heavy Industries’ 73 percent leap, both on expectations the weaker yen would boost their businesses.”
I recommend having a look at Nissan also. It’s a bit bigger than Mazda and Fuji’s Subaru, and better positioned in the world markets. It also is quite an interesting currency play. Sure, only 23 percent of its global production is still in Japan. However, and now you know why Carlos Ghosn was jumping up and down, waving his arms against the obscenely high yen for the last two years. Quite interestingly, when Ghosn went on his rampage against the deviant yen in late 2011, he called a high point of the obscene currency at 76 to the greenback. Today, a dollar buys 93 yen. The yen is still expensive, and a currency play buy buying Japanese car stocks could make you some money.
Others have similar ideas. Fuji was up 5.1 % today, Mazda 4.4%, Nissan is up 4.3%. Perversely, the company that is least dependent on exports from Japan, Toyota, was up 6 percent today in Tokyo. Can’t beat good financials on top of an improving currency situation. Also not that I said “formerly beaten down stocks.” The stock-in-question all had a good run-up in the past months. If the yen gets weaker, they will go up further. If Detroit gets its wish, you will lose money.