Sakura Season Stock Frenzy: A Cautionary Tale of Falling for the Blossoms
In this article, I'll highlight the dangers of falling for the cherry blossom stock frenzy with five stocks to avoid, and five stocks to pick instead, during Hanami season
The Sakura season in Japan, also known as Hanami, is a time when delicate pink petals fall from the sky, creating a mesmerizing spectacle. The annual event ignites a flurry of economic activity in form of hordes of Japanese and foreign tourist alike spending money like mad on travelling, eating, drinking and purchasing anything Sakura related.
Every year, I see a lot of magazines and newsletters [especially in Japan] tempting investors to jump on the bandwagon and bet on seasonal stocks. But beware, for the market can be as fickle as the transient blossoms themselves.
In this article, I'll discuss the perils of getting swept up in the cherry blossom stock frenzy and highlight five examples of publicly traded stocks that may look enticing during the Sakura season but might leave you with a bitter aftertaste.
So without further ado, here are five stocks that you should absolutely not buy just because it's Hanami season, and their alternatives:
#1 Oriental Land (TYO 4661)
Oriental Land is the operator of Tokyo Disney Resort, which consists of two theme parks: Tokyo Disneyland and Tokyo Disney Sea.
The resort is one of the most popular tourist attractions in Japan, drawing over 30 million visitors annually. You might think that Oriental Land would benefit from the increased demand for entertainment and leisure during Hanami season, but the reality is far from magical. Oriental Land has been hit hard by the Covid-19 pandemic, which forced it to close its parks for several months in 2020 and limit its capacity and operations since then.
Oriental Land's revenue plunged 67% in 2020, and its net income turned into a net loss of 51 billion yen ($460 million). The company posted another net loss of 40 billion yen ($360 million) in 2021, as the recovery of its business remains uncertain amid the ongoing health crisis. In 2022, the company manage to break even and according to forecasts, it will do substantial profits for this year. However, even though Oriental Land's stock price has dropped more than 20% from its peak in January 2020, but it still looks overvalued compared to its peers with a P/E of 106x and no expansion plans outside the Tokyo Disney theme parks…
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