Investing in Your Backyard: Japan

Break out the sushi and sake -- there's a bento box of investing goodness coming your way!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, the spotlight falls on Japan. The subjects of Emperor Akihito make up the world's second-largest economy, with a $4.6 trillion gross domestic product. The combination of a samurai work ethic, low defense budget, and focus on high technology sure sounds like a recipe for business success.

If you happen to live between Okinawa and Hokkaido, you already have a few advantages when it comes to evaluating the local market, such as access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know whether the weather matches the business climate -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are the largest companies headquartered in the Land of the Rising Sun:

Oh my, I'm seeing stars -- lots of stars. The starry skies stretch far beyond Japan's top stocks, too. My Capital IQ screen found 27 Japanese companies trading on the NYSE, Nasdaq, or AMEX exchanges, and 23 of them have earned their Foolish colors with a CAPS rating. Thirteen five-star stocks in a field of 23 is beyond outstanding. It's like Oklahoma all over again.

You already know and, in many cases, love these companies. Toyota and Honda hardly need introductions, but Mitsubishi UFJ might not be as familiar. It's a massive bank with $1.7 trillion in assets, created two years ago by a merger between the second- and fourth-largest banks in the country. All-Star CAPS player martynanasi notes that the Japanese economy is recovering from a 16-year depression, making MTU "a nice play on strength of the economy if world growth stays somewhat intact."

That's nice. What else you got?
While it's easy to find five-star picks here, including household names like Motley Fool Stock Advisor pick Nintendo (OTC BB: NTDOY.PK) and gadget maker Kyocera (NYSE: KYO), other well-known businesses have a harder time gaining the favor of our CAPS investors.

Sony (NYSE: SNE), for example, is only a one-star stock today, as isHitachi. Global Gains recommendation Nissan Motor (NYSE: NSANY) has a two-star rating.

But these are really the exceptions. The hit parade continues: NEC, TDK, and Canon all have five-star ratings, and if you're willing to step out of the major U.S. exchanges for a great stock, you can find another 795 Japanese businesses on the Pink Sheets and Bulletin Boards. Besides Nintendo, you'll see Toshiba, Nippon Steel, the more familiar form of Mitsubishi -- and the list goes on and on.

Whether you have a personal background in the Far East or just want to invest in well-known global brands with serious staying power, Japan can serve you well. Low, low interest rates and a strengthening yen make the region even more attractive, and the Japanese work ethic is the stuff of legend. Feel free to dig in.

Do you agree? Disagree? Feel free to weigh in on the Japanese market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if this ain't your cup of ceremonial green tea, maybe we'll come around where you live the next time.

Further Foolishness:

• The Best ETF for 2007: iShares MSCI Japan Index Fund
• Quick Take: Are Free Rides in Japan Gone?
• International Superstar Stocks: Japan

Nintendo is a Motley Fool Stock Advisor selection, and Nissan is a Motley Fool Global Gains pick.

Fool contributor Anders Bylund is a Nissan shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, or follow him around the world on these Foolish local-business treks. Foolish disclosure is hotter than the rising sun.