Stocks of the Week — RVR, RIO

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.

MARKET UPDATE

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.

AORD 2022-01-24

Some of our stock tips have fall­en along with the mar­ket in the last week, but oth­ers have con­tin­ued to per­form well. 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 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 web­site

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.

RVR chart

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).

RIO web­site

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

RIO 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.