Japan’s 5 Most Overvalued Companies - No. 5: Don't get Caught in the “Magic Mouse” Trap!

Disclaimer: The content below reflects my personal opinions for educational purposes only and is not investment advice. Do your own research and consult a licensed professional before acting on any information here.

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Despite the US government looking hell-bent on crashing the global economy, Japan’s stock market is still partying like it’s 1989.

Therefore, I welcome you to my countdown of the five most overvalued Japanese stocks, companies whose share prices are far higher than their numbers support.

To separate hype from reality I check:

• Forward and trailing P/E vs. peers - When these Japanese stocks trade at P/E multiples miles above their sector, investors are overpaying for future hopes. For the companies on this list, I've looked hard, and there's no solid justification for that massive premium.

• Debt-to-equity and interest-coverage ratios - Heaps of debt and barely scraping by on interest payments? That’s a glaring risk.

• How much of the price tag comes from buzzwords rather than cash flow - If a stock's price is all exciting buzzwords but the actual cash flow is weak or missing, it's a hype-driven valuation. With these Japanese companies, the compelling story simply doesn't have the hard cash backing to support their inflated price tags.

For the first company on this notorious list: You might not know this, but Disneyland Japan, sometimes considered the world’s best run theme-park, is actually not run by Disney at all, but by a Japanese company with a very very expensive valuation: