We have two stocks to bring to your attention to this week. These recommendations are based on our analysis using data from Sunday 23 Jan 2022.
Doom and gloom in the market last week but QAVers know that it’s just part of the normal cycle and continue to follow our rules about when to sell and when to buy. As QAV Club member Jeremy said in our member’s Facebook group said “It’s days like this that you are thankful to have rules for selling!” And of course there are always stocks that look like a good buy, even during down cycles.
- KRM is up 80% since we recommended it on 20/9/21
- GWR is up 50% since we recommended it on 13/12/21!
- MHJ is up 52% since recommended on 28/9/21
- SFR is up 14% since reocmmended on 18/10/2021
- KIL is up 13% since recommended on 26/10/21
- CIA is up 10% since recommended on 29/12/2021!
- AMI is up 16% since recommended on 02/11/2021
Of the 39 stocks we have recommended since September, 33% are up, 13% are neutral, while the other 54% 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: RVR
Red River Resources Limited (XASX:RVR) is a mineral exploration Company having operations at the Thalanga zinc project and the Hillgrove gold mine.
RVR is currently well above its buy line and has a little head room on the sell line, although I’d set alerts and keep a close eye on it in the current market volatility.
Here are the reasons we like RVR this week.
- Based on the current share price of $0.21, RVR has a quality score of 69% and a QAV score of 0.29
- Average Daily Trade of $131,000
- Price-to-Operating Cash Flow ratio of 2.41
- Financial health is strong and steady
- Price is less that the analyst consensus our our IV#2
- Growth / PE is greater than 1.5
- Our IV#2 is higher than twice the current price
2. Large Cap: RIO
Rio Tinto Limited (XASX:RIO) is engaged in minerals and metals exploration, development, production and processing. The Company’s Portfolio of assets is condensed into four product groups: Aluminium, Copper & Diamonds, Energy &Minerals and Iron Ore (iron ore making up about 90% of its revenues).
Named after a river in Spain which has been mined for minerals for at least 5000 years, the company Rio Tinto has a long and fascinating history. When the Spanish monarchy sold the rights to mine on the Rio river in 1873, they were purchased by a consortium lead by Scottish industrialist Hugh Matheson and the company soon ended up in the hands of the Rothschild family. After a series of acquisitions and mergers over the next century, in 1962, Rio Tinto Company merged with the Australian firm Consolidated Zinc to form the Rio Tinto – Zinc Corporation (RTZ) and its main subsidiary, Conzinc Riotinto of Australia (CRA). In 1995, the companies merged into a dual listed company, in which management was consolidated into a single entity.
It’s not often than a company of this size makes it onto our buy list, so this is a rare chance for QAV members.
Some of the reasons we like RIO this week include:
- Based on the current share price of $108.72, they have a quality score of 97% and a QAV score of 0.17
- Average Daily Trade is $117,304,000
- Price-to-Operating Cash Flow is 5.79
- Financial health is strong and steady
- Dividend yield is higher than the bank rate
- Rated as a Star Income Stock on Stock Doctor
- Current price is lower than the analyst consensus and our IV#2
- PE is the lowest in six halves and is less than the yield
- It has a new three point upturn
- Our IV#2 is more than twice the current price
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.