Japanese Food Retail & Pharmaceutical Companies Look InterestingJanuary 21, 2014
We divide the stock market into regional baskets to measure performance trends. We have an Asia growth counter-cyclical basket that is comprised of the consumer staples and health care sectors within the MSCI Asia-Pacific index. The last time the MSCI Developed Asia-Pacific growth counter-cyclicals underperformed by 20% was April 2011. Soon thereafter the group outperformed by almost 30% into the October 2011 lows.
Two groups stand out to us for consideration: Japanese food retail and pharmaceuticals. Using our intangible-adjusted valuation metrics that adjust for things like R&D spending or brand promotion, there are a handful of companies selling at fairly cheap valuations. With much of the world’s cyclical groups selling at or over 10x our adjusted cash flow, there appear many some good portfolio ideas here.