We have two stocks to bring to your attention to this week. These recommendations are based on our analysis using data from Sunday 16 Jan 2022.

MARKET UPDATE

The market over the last week has been as uncertain as the fate of a tennis player.

 

AORD 2022-01-17

Our stock tips have continued to perform well though. The top stock tips we’ve made in the last few months include:

  • KRM is up 80% since we recommended it on 20/9/21
  • GWR up 67% since we recommended it on 13/12/21!
  • MHJ up 63% since recommended on 28/9/21
  • ATP is up 33% since recommended on 15/22/2021
  • IMA is up 20% since recommended on 02/11/2021
  • SFR is up 18% since reocmmended on 18/10/2021
  • KIL is up 18% since recommended on 26/10/21
  • CVW is up 14% since recommended on 4/10/21
  • FEX is up 16% since recommended on 20/12/2021!
  • CIA is up 16% since recommended on 29/12/2021!
  • AMI is up 16% since recommended on 02/11/2021 

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, but 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.

THIS WEEK’S STOCK RECOMMENDATIONS ARE:

1. Small Cap: MFD

Mayfield Childcare Limited (XASX:MFD) operates day childcare centres located in Victoria. Mayfield Childcare  owns 20 long day childcare centres located in and around metropolitan Melbourne.

MFD has been on and off our buy list regularly over the last few years. It has solid fundamentals and, as you can see in the below chart, has done very well since the COVID cough.

MFD chart

It was actually our Stock of the Week on 14 Feb 2020 – just before COVID crashed everything. Not MFD’s fault, of course. And if you’d bought it then and held on to it, it would have done you right. So it was a good call then and we think it’s still a good call now.

Here are the reasons we like MFD this week.

  • Based on the current share price of $1.19, MFD has a quality score of 79% and a QAV score of 0.22
  • Average Daily Trade of $31,000
  • Price-to-Operating Cash Flow ratio of 3.59
  • Financial health is strong and steady
  • Price is less that the analyst consensus, our IV#1, our IV#1, and book plus 30%
  • Dividend yield is higher than the current bank rate
  • High percentage share ownership by the directors

2. Large Cap: BPT

Beach Energy Limited (XASX:BPT) is an oil and gas exploration and production company based in Adelaide, Australia. It has operated and non-operated, onshore and offshore, oil and gas production from five producing basins across Australia and New Zealand and is a key supplier to the Australian east coast gas market.

BPT website

 

Beach Energy, which is backed by Kerry Stokes, is another of those stocks that come and go from our buy list. We had to remove them from our buy list last May when they had some issues regarding their Western Flank operations which tanked their price. They also had a change of Managing Director last November.

But the futures for natural gas are currently optimistic, and some analysts seem to think this will work in Beach’s favour.

Natural gas futures

Some of the reasons we like BPT this week include:

  • Based on the current share price of $1.40, they have a quality score of 87% and a QAV score of 0.21
  • Average Daily Trade is $11,729,000
  • Price-to-Operating Cash Flow is 4.20
  • Financial health is strong and steady
  • Price is less that the analyst consensus, our IV#1, and book plus 30%
  • It has a new three point upturn
  • Predicted EPS growth divided by PE is higher than 1.5
  • Our IV#2 is more than twice the current price

BPT 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 COMPLETE buy list for QAV Club members. It contains 100-200 stocks.