We have two stocks to bring to your attention to this week. This recommendation is based on Tony’s analysis using data from Sunday, 14 Nov 2021. 

1. SMALL CAP: ATP

Our small cap stock this week is Atlas Pearls Ltd (ASX:ATP), an Australian listed pearling business that produces South Sea Pearls, with farming operations throughout Indonesia and retail stores in Perth and Bali. Atlas has earned reputation as a world leading pearl producer of the queen of all gems, the South Sea pearl, specialising in high quality white and silver pearls.

  • Based on their share price at $0.03, they have a Quality Score of 118% and a QAV score of 0.35
  • Average Daily Transaction is only $7,000
  • Our IV #1 is $0.08, 2.5x the current share price
  • Equity Per Share is $0.04, 30% higher than the share price
  • Price-to-Operating Cash Flow is 2.70
  • Directors hold 19% of the stock
  • Financial health is strong
  • New three point uptrend
  • Record low PE score

2. LARGE CAP: SUL

Our large cap stock this week is Super Retail Group Limited (ASX:SUL). They are primarily involved in retailing of auto parts and accessories, tools and equipment, retailing of boating, camping, outdoor equipment, fishing equipment and apparel and retailing of sporting equipment and apparel.

  • Based on the share price of $13.19, they have a Quality score of 87% and their QAV score is 0.17
  • Originally Super Cheap Auto, QLD company
  • Interesting history, early 70s mail order parts business
  • Then they set up stores, Super Cheap Auto, the Bunnings of car parts
  • Expanded, diversified, bought Rebel Sports, BCF, etc.
  • Average Daily Transaction $9.5m
  • Recent Star Stock
  • Just under consensus broker and SD IV
  • High yield 6.7%
  • ROE 27%
  • NTA 1.59
  • 5x Price-to-Operating Cash Flow
  • Slightly above our IV1, but less than IV2
  • Original founder still holding a lot of stock, board has 29%
  • Current PE is the lowest in three years

Please Note: 

Our recommendations are based on the share price as of the date of the download. If the share price changes, this will affect the QAV score and its ranking on our buy list, so please take price changes into account before making any investing decisions.

Also note that while we apply a high level of science in our selection process, some stocks may not perform well in the short term. Like Warren Buffett, we aim for a 60% success rate (meaning 60% of our stocks will do well in the short term, the other 40% will not). So it’s very important to monitor your portfolio and to sell the ones that don’t perform to your expectations. The way we do this in QAV is using Rule #1 and the 3PTL. If you’re not familiar with how to use those, please listen to the podcast and consider joining QAV Club.

Finally, please also note that this isn’t personal financial advice and you should consult a financial planner before making any investment decisions.

Each Monday we publish our full buy list for QAV Club members.

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