Barrons, Abby Cohen, " What is your other idea?

Cohen: If I were looking to invest in one other market outside the U.S., I would look to Japan. I said that last year, as well, when I recommended Toyota Motor and Daikin Industries, both of which still look interesting. Partly, this has to do with Japan’s final move toward reflation. The Japanese economy is doing somewhat better. Stocks are still attractive from a valuation perspective. I am proposing two Japanese REITs [real estate investment trusts].

A few years ago I recommended Prologis, a logistics REIT in the U.S. Nippon Prologis REIT is a related company, trading in Tokyo. It is expected to generate a total return of about 25% this year, although if Japanese interest rates rise too much, too fast, that would be a problem. The company has long-term contracts with its customers, which has served it well. If costs go up because of rising rates, it won’t have the flexibility to raise prices. But projected total returns range from 18%-28%, depending on the interest-rate scenario.

Is this pick more of a play on Japan, or specific trends within the Japanese market?

Cohen: Both. We are seeing inflows of foreign capital into Japan. Also, the Japanese economy favors logistics providers. And, this REIT’s returns, as well as those of my next stock, are higher than REITs elsewhere in the world.

The second company is Japan Hotel REIT Investment. It, too, is expected to have a total return in the high-20% range over the next 12 months. Last year, its price fell 11%. Japan Hotel will benefit from several things happening in Japan. Consumers are out spending money and traveling. Japanese hotels are doing better. Japan Hotel REIT is focused on individuals, families, and business travelers who can afford to spend. If the Japanese economy sours and people stop spending, that would be an issue. The REIT is expected to yield 5.7% in calendar 2024.""