Kaga Electronics Co Ltd Growth Forecast and Market Analysis: A Growing Investment Opportunity

KAGA ELECTRONICS CO., LTD. is a Japanese company that has been engaged in the manufacture and sale of electronic products since 1968. It is engaged in the development, manufacture and sale of semiconductors. It also sells personal computers (PCs), PC peripheral equipment, and photographic and video products. It also produces computer videos and develops entertainment products. It also provides repair services for electronic equipment.

Kaga is trading at a fairly attractive price, at twelve times recurring earnings, 8.7 times free cash flow and 1.25 times book value. It is mainly from a sales perspective that the price is attractive, with a ratio of 0.37. The dividend yield is modest, at 1.44%, but is explained by a distribution ratio of only 17.4%. There is therefore still a lot of room for maneuver for Kaga to increase its dividend, as it has already done in the past, or to invest in the development of the company.

The dividend, profits, cash reserves and asset values are all growing over the long term, which proves that the company is managing to create shareholder value over time. This is also reflected in the share price, which has more than quadrupled in the last five years.

Liquidity reserves are very comfortable, with a current ratio of 2.06 (up) and a reduced liquidity ratio of 1.68. However, we are still at reserve levels that are not too excessive, which would represent a waste of available resources.

Gross margin is up, at 13.7%, return on assets is also up, at 5.55%, the debt ratio is down, at 3.66% and even the number of shares outstanding has slightly decreased in 2017. The lights are green for Kaga Electronics.

Kaga is a great company with solid fundamentals. With this company we are certainly touching on an area more sensitive to economic upheavals, however Kaga has broad enough shoulders to face them. The share price has risen sharply in recent years, but we are at levels identical to those of 2006, and even of... 1990. This famous Japanese bubble has definitely left its mark. We can therefore reasonably imagine that Kaga's share price will finally exceed its historical highs in the not too distant future.

Currently the company is slightly undervalued at current figures. However, if earnings per share continue to grow at a pace more or less as strong over the next five years as they have over the past five (from 16.06 JPY per share in 2013 to 249.4 JPY in 2017), then Kaga's share price could easily double over the same period.

I bought Kaga last week.