(FORTUNE Magazine) – Americans can't seem to stop buying Japanese cars. Turns out the companies that make them look like pretty good buys too. Japan's Big Three--Honda, Nissan, and Toyota--have made huge inroads into the all-important U.S. market. Over the past decade, as U.S. carmakers have watched their share slip from 73% to 64%, Japan's portion has climbed, from 24% to 27%, according to Ward's AutoInfoBank. And S&P auto analyst Scott Sprinzen says the trend isn't likely to reverse, as Japanese automakers introduce more models and ramp up production.

Despite this growth, Honda, Nissan, and Toyota all still trade at the bottom of their historical price/earnings range, according to UBS Warburg analyst Chris Redl. Says Redl: "All three are stocks that should be core holdings over the next two or three decades."

Honda (HMC, $23) is the most impressive of the bunch. It cranked out record profits of $2.8 billion for the year ended March 31, up 56% over 2001. Sales should get a boost from the introduction of such models as the gas-and-electric Civic Hybrid and the 2003 Element, a small SUV. At just 11 times 2002 earnings, it's the favorite of Morgan Stanley auto analyst Stephen Girsky. "The stars have aligned," he says. "They've improved their product mix, and demand has been growing."

Nissan (NSANY, $16), by contrast, is a turnaround story. Brought back from the brink of collapse by Carlos "Le Cost-Cutter" Ghosn, Nissan should make $1.8 billion in its 2001 fiscal year (which ended March 31), up from $1.2 billion last year, Redl estimates, if one excludes a hefty tax credit and one-time charges for restructuring. The stock sells for 15 times this year's earnings but, says Redl, "Nissan's product momentum is so strong that it should continue to surprise on the upside."

Toyota (TM, $54), Japan's biggest carmaker, is probably the least appealing...for now. The stock sells for 17 times 2002 earnings, and the real focus is on increasing its global market share from 10% to 15%. "Toyota is arguably the best car company, but that doesn't mean it'll be the best stock over the next 12 months," says Girsky. The key is whether its expansion efforts pay off. If so, both competitors and investors should take notice.

--Julia Boorstin