The market has been very turbulent over the last month, but as investors we press on!
Tony teaches us to Always Be Invested, regardless of where the market cycle is, because you never know when it’s going to turn around (April 2020 demonstrated that!) and you have to be in it to win it. Looking back over his 30 years investing experience, Tony knows that a lot of his growth came after market corrections. But, of course, those are times when many investors have been scared away from the markets, so they are sitting on cash or bonds and therefore miss out when the market picks up again, only getting back in after a lot of the upside has already been had. Times likes these help demonstrate the value of having a tried-and-tested system to guide our exit and entry points and our investing behaviours. So… with that…
We have two stocks to bring to your attention to this week. This recommendation is based on Tony’s analysis using data from Sunday, 5 Dec 2021.
1. Small Cap: ASG
Autosports Group (XASX:ASG) commenced operations in 2006 with the establishment of the Audi Autosports Dealership as a greenfield site. Since then the portfolio has grown from a single dealership to over 50 retail businesses throughout Sydney, Melbourne, Brisbane and the Gold Coast. The Group was listed on the Australian Stock Exchange in November 2016.
- It has a QAV score of 0.26
- Average Daily Transaction is around $50,000
- Price-to-Operating Cash Flow is 3.61
- Share price is less than the consensus valuation
- Share price is also less that our future Intrinsic Value
- Share price is less than Book + 30%
- New three point uptrend (see below)
- Growth / PE is greater than 1.5
- Dividend yield is higher than bank rate
- Financial health is stable and strong
- High level of director stock ownership
- Quality score of 93%
2. Large Cap: MQG
Macquarie (XASX:MQG) is a global financial services group operating in 33 markets in asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advisory, capital raising and principal investment.
Macquarie is a company with a great track record of high performance and we always like to see it come back onto our buy list. The share price is currently at its five-year peak, but that doesn’t concern us.
Some of the reasons we picked MQG this week include:
- QAV score of 0.18
- Average Daily Transaction of $125 million
- Price-to-Operating Cash Flow of 2.92
- Financial health is strong and stable
- Stock Doctor “Star Stock”
- Share price is currently less than the Consensus Intrinsic Value
- Quality score of 57%
Please note: Tony and Cameron currently own MQG.
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.
We have very strict guidelines about what we disclose about our own portfolios, and when we buy and sell stocks that appear as our stocks of the week. You can read our guidelines here.
Finally, please also note that this isn’t personal financial advice and you should consult a financial planner before making any investment decisions.