Stock Tips for the Week: FEX, GMA

Well the last week was rough yet again for the AORD, with Omi­cron fears con­tin­u­ing to add to the mar­ket’s woes.

Despite the car­nage, some of our recent stock tips con­tin­ue to per­form well.

• KRM is up 60% since we rec­om­mend­ed it on 20/9/21
• MHJ up 31% since rec­om­mend­ed on 28/9/21
• KIL up 15% since rec­om­mend­ed on 26/10/21 
• CVW is up 14% since rec­om­mend­ed on 4/10/21
• AMI up 11% since rec­om­mend­ed on 2/11/21
• IGL up 5% since rec­om­mend­ed on 13/9/21

Since we start­ed pub­lish­ing our stocks of the week in Sep­tem­ber, about 50% of our picks are either up or neu­tral, while the oth­er 50% are down, some by a lit­tle, some by a lot, and if you’re fol­low­ing the QAV sys­tem, you’d have already replaced those in your port­fo­lio (QAV Rule #1 — Nev­er Lose Mon­ey). Our goal is to have 60% of our stocks per­form well over the long term. Obvi­ous­ly, dur­ing tur­bu­lent mar­kets, find­ing these is a lit­tle more dif­fi­cult than it is dur­ing upbeat mar­kets, but that’s why invest­ing takes patience and a long-term strat­e­gy for rid­ing out the cycles.

We have two stocks to bring to your atten­tion to this week. This rec­om­men­da­tion is based on Tony’s analy­sis using data from Sat­ur­day, 18 Dec 2021. 

1. Small Cap: FEX

Fenix Resources Ltd (XASX:FEX) is a niche Iron Ore pro­duc­er based in West­ern Aus­tralia. Their cur­rent project is Iron Ridge, a high-grade Iron Ore mine locat­ed approx­i­mate­ly 70km north-north west of Cue, WA.

Some of the rea­sons we like FEX this week include: 

• Based on a share price of 23c, it has a qual­i­ty score of 90% and a QAV score of 0.51
• Aver­age Dai­ly Trans­ac­tion vol­ume is $567,000
• Their Price-to-Oper­at­ing Cash Flow is a very low 1.78
• Finan­cial health is strong
• Cur­rent share price is less than our Intrin­sic Val­ue #1
• Cur­rent PE is less than their div­i­dend yield
• Yield is high­er than the cur­rent bank rate

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2. Large Cap: GMA

Gen­worth Mort­gage Insur­ance Aus­tralia Lim­it­ed (XASX:GMA) is a lead­ing provider of Lenders Mort­gage Insur­ance (LMI) in Aus­tralia. They also pro­vide tai­lored risk and cap­i­tal man­age­ment solu­tions for lender cus­tomers in the Aus­tralian res­i­den­tial mort­gage mar­ket.

Some of the rea­sons we like GMA this week include:

• Based on the cur­rent share price of $2.36, it has a qual­i­ty score of 88% and a QAV score of 0.35
• Aver­age Dai­ly Trans­ac­tion vol­ume of $1,817,000
• Price-to-Oper­at­ing Cash Flow is a low 2.5
• Finan­cial health is strong
• Share price is less than the con­sen­sus val­u­a­tion and less than our Intrin­sic Val­ue #2
• Share price is also less than Book Val­ue and also less than Book Val­ue + 30%
• It has a new three point trend line breach
• Growth / PE is less than 1.5

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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.