Stock Tips for the Week: TGA, CIA

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.

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.

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

---

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.

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

---

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.