Japan’s 5 Most Overvalued Companies - No. 4: Affordable Fashion, Unaffordable Stock?

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 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 - Sky-high P/Es versus their sector? Investors are banking on miracles. For these Japanese companies on the list, there's no real basis for that kind of faith.

• Debt-to-equity and interest-coverage ratios - Crippling debt and shaky interest coverage are major red flags. For these listed Japanese companies, their premium stock prices blindly ignore this financial instability.

• A straight-up DCF sanity test (10-year forecast, 3% terminal growth) - A standard DCF reveals the gap. For these listed Japanese firms, their current prices require growth forecasts so wild they're basically fiction.

• How much of the price tag comes from buzzwords rather than cash flow - All buzz, no cash? That’s a classic hype valuation. For these Japanese names on the list, their exciting narratives lack the actual cash to justify such lofty prices.

Today, we land on the fourth spot of this notorious list: A company you all know, and most of you love, that despite the many headwinds in its industry is priced for perfection: