Japanese Again Bullish on U.S. Stocks : Outlook: A research firm says that although Japan’s economy will outpace the United States’ through ‘95, U.S. firms will show stronger profits.

If you’re looking for a place to invest in the 1990s, you might take notice that the Japanese are once again bullish on corporate America.

So suggests a report from Nomura Research Institute, the research arm of Nomura Securities, the world’s largest brokerage and securities firm.

From it, smaller investors can glean tips on how a Japanese powerhouse research firm sees the new decade unfolding in global economic terms.

Just when Americans are questioning whether their country is in decline, NRI expects companies here will post stronger earnings gains than their Japanese counterparts for the next five years.

Because of that and other factors, it says that U.S. stocks are undervalued--significantly so. What’s more, it says companies here are more competitive than is widely believed--thanks partly to healthy spending on research, sometimes to catch up with Japanese companies.

“After we finished our research, we found potential in the U.S.,” said Makoto Hiranuma, manager at NRI’s U.S. affiliate, Nomura Research Institute America Inc.

Nomura officials disclosed the report’s major findings, although the full report will not be unveiled to investors in this country until February.

NRI’s analysts combed reams of data on U.S. and Japanese companies. And their basic conclusion was that while Japan’s overall economic growth will double that of the United States in the years through 1995, U.S. companies are better positioned to show stronger earnings. NRI thinks that the growth of many Japanese companies has peaked.

“We see a turning around in U.S. industry competitiveness since the mid-1980s,” says Isao Yamamoto, a securities analyst at NRI.

Through the first half of the decade, the research firm projects that the net earnings of 265 non-financial U.S. companies will grow an average of 13%, outpacing the 7% rate projected for 400 companies in Japan.

Among NRI’s top picks: Compaq Computer Corp., Cadence Design Systems Inc., Eli Lilly & Co., Bristol-Myers Squibb Co., Wal-Mart Stores Inc., Dow Chemical Co., Toys R Us Inc., Merck & Co. Inc. and Blockbuster Entertainment Corp.

NRI analysts concluded that the painful restructurings that many big U.S. companies went through in the early and mid-1980s have paid off, leaving them better positioned for the 1990s.

U.S. companies are forging valuable links with outside firms instead of taking the go-it-alone approach of the past. NRI cites Compaq’s ties with computer dealers, relationships it says have given the computer maker valuable information about customer needs.

In addition, companies here have learned some lessons--namely, that it pays to fashion a product to the needs and customs of foreign markets instead of thinking that what’s good for the United States is good for everyone else.

One example: Procter & Gamble Co.’s “Dosing Ball,” which dispenses liquid detergent more evenly throughout the wash. The company developed the product for Europe, which is dominated by front-loading machines. Front-loaders generally work better with dry detergent but the ball has been well received, helping P&G; sell more liquid products.

The Japanese researchers also noted that the sheer size of the United States, with its 250 million people, gives companies such as discount retailer Wal-Mart and others room to build their sales and earnings.

“The market is bigger. Your land is bigger,” said Hiranuma. “Your population is twice as large as the Japanese population.”

It is not just Nomura that is bullish on America. Merrill Lynch chief investment strategist Charles Clough is, as well.

“The big advantage that the U.S. is going to have is our interest rates are going to be lower, and our costs of manufacturing are going to be lower,” he said.

Clough reckons that a drop in private borrowing by consumers will allow domestic interest rates to fall.

“If that happens, you’re going to see a lot of investment flow here,” he said, adding that more money is already flowing here from abroad.

In one recent example, Japan’s Matsushita Electric Industrial Co. agreed to buy entertainment giant MCA Inc. for $6.13 billion. The deal will be the biggest foreign takeover by a Japanese company.

Nomura’s Picks Nomura Research Institute, the research arm of the world’s largest brokerage, Nomura Securities, has assembled a report that recommends investing in U.S. stocks. Following are the report’s forecasts of the average annual earnings growth for five domestic companies for the years 1990-95:

Company Growth Cadence Design Systems 30% Blockbuster 28% Compaq Computer 23% Bristol-Myers Squibb 21% Merck & Co. 18%