The AORD felt a little more buoyant in the last week – it must have been all of that Christmas pudding. COVID cases are shutting down flights and businesses, crushing our PCR testing facilities, but the market doesn’t seem to care.

AORD 2021-12-29

The top five stock tips we’ve made in the last few months include:

  • KRM is up 60% since we recommended it on 20/9/21
  • MHJ up 14% today (!), and up 51% since recommended on 28/9/21
  • KIL up 18% since recommended on 26/10/21 
  • CVW is up 13% since recommended on 4/10/21
  • AMI up 16% since recommended on 2/11/21

Since we started publishing our stocks of the week in September, about 60% of our picks are either up or neutral, while the other 40% 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, 25 Dec 2021. 

1. Small Cap: TGA

Thorn Group Limited (XASX:TGA) is Australia’s financial services organisation that provides alternate consumer and commercial leasing products and consumer and commercial financing solutions. Thorn’s two key divisions, Radio Rentals and Thorn Business Finance.

TGA website

Some of the reasons we like TGA this week include: 

  • A very high QAV score of 1.79, based on the current share price of $0.28, and a quality score of 100%
  • Average Daily Transaction volume of $39,000, making it on the small side, but big enough for many investors
  • Price-to-Operating Cash Flow a very low 0.56
  • Financial health strong and steady (they did have a qualified audit noted in their last annual report, but there’s no mention of it in their latest results)
  • Current share price is less than the consensus valuation, our IV#1 and Book +30%
  • It has a new three point upturn
  • Current PE is the lowest in the last six halves
  • Current yield is less than the bank rate
TGA chart

2. Large Cap: CIA

Champion Iron Limited (XASX:CIA) is an iron development and exploration company, focused on developing its significant iron resources in the south end of the Labrador Trough in the province of Quebec. Their flagship projects are bloom lake and fire lake project.

CIA website

Some of the reasons we like CIA this week include:

  • Based on the share price of $5.43, it has a quality score of 79% and a QAV score of 0.24
  • Average Daily Transaction of $9.3 million
  • Price-to-Operating Cash Flow 3.31
  • Financial health strong and steady
  • Share price is less than the consensus valuation, both our IV#1 and IV#2
  • Record low PE
  • Consistently increasing equity
CIA 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.