5-Star Japanese Stocks to Consider for Your Portfolio

Once upon a time, Japan was the world's second largest economic superpower. Back in the 1980s, Japan was a global contender, with the strongest economy in the Far East -- and possibly even a threat to U.S. dominance.

Fast-forward to 2010, where the Nikkei is the single worst performing index of the world's 40 largest markets. The current weakness of its economy is matched by the strength of the yen -- and with so much of the country's business taking place overseas, it's wreaking havoc on a number of Japanese stocks.

Here's why: Right now, a company with most of its business abroad is making its sales in weak dollars, but has to pay its operating costs with the yen, which means smaller profit margins. And with the wobbly Nikkei chained to the performance of the yen, even the companies that managed to post profits have had weak stock showings -- last week, shares of both Sony and Honda hit the skids in spite of solid profits.

On the bright side, the Nikkei's weakened state may also present some interesting investing opportunities.

According to Dr. Steve Sjuggerud, editor of Daily Wealth, buying into the Japanese market may have significant upside potential; and because it's so cheap, low-risk to boot. For Sjuggerud, it's only a matter of time before the yen drops -- and when it does, the companies with strong overseas presence will soar.

Which got us thinking: which Japanese stocks are investors willing to bet on? We looked to the Motley Fool CAPS community, to see which companies they ranked the highest -- how do they rate with you? (Click here to access free, interactive tools to analyze these ideas.)

Interactive Chart: Press Play to see how the market caps have changed for all the stocks mentioned above.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.