Well the AORD has recovered in the last week! Not quite back to where it was, but it’s certainly had a more upbeat week.

AORD 2021-12-13
AORD 2021-12-13

As I pointed out last week, 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. And some of the stocks we’ve recommended in the last few months have been doing very well.

  • KRM is up 80% since we recommended it on 20/9/21
  • MHJ up 34% since recommended on 28/9/21
  • KIL up 18% since recommended on 26/10/21
  • AMI up 16% since recommended on 2/11/21
  • IGL up 10% since recommended on 13/9/21

A handful have gone backwards too, but as you know, our goal is to get 60% of the picks right, and to pull the weeds as we go, if they drop below 10% of the buy price (aka Rule #1).

We have two stocks to bring to your attention to this week. This recommendation is based on Tony’s analysis using data from Sunday, 12 Dec 2021. Now that Tony has decided Iron Ore is once again a commodity buy, both of our stocks this week are iron ore mining companies.

iron ore price chart 2021-12-13
iron ore price chart 2021-12-13

1. Small Cap: GWR

GWR Group Limited (XASX:GWR} is an independent, Australian resource house, focused on creating shareholder wealth through the development of high quality mineral exploration and development projects.

GWR website
GWR website

Some of the reasons we like GWR this week include:

  • Based on a share price of 11c, it has a QAV score of 0.79
  • Quality score of 100%
  • Average Daily Transaction is around $35,000
  • Financial health is recovering and strong
  • Share price is less than our Intrinsic Value #1
  • PE is less than the dividend yield
  • Dividend yield is higher than bank rate
  • Price-to-Operating Cash Flow is 1.26
  • High level of director stock ownership
GWR 3PTL chart
GWR 3PTL chart

2. Large Cap: GRR

For over 50 years Grange Resources has been Australia’s premier producer of iron ore pellets. It was also one of the best performers in our QAV portfolio in 2020, delivering a 187.92% annualised gain.

GRR website
GRR website

Some of the reasons we picked GRR this week include:

  • At a share price of 75c, it has a QAV score of 0.43
  • Quality score of 100%
  • Average Daily Transaction of $1.379 million
  • Price-to-Operating Cash Flow of 2.31
  • Financial health is strong and stable
  • Share price is lower than our Intrinsic Value #1
  • Share price is lower than Book + 30%
  • Record low PE score
  • It has consistently increasing equity
GRR share price chart
GRR share price chart

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

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.

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