We have two stocks to bring to your attention to this week. These recommendations are based on data from Sunday 30 Jan 2022.

MARKET UPDATE

It’s been another volatile week as the Australian market was officially declared a “correction”. Fortuanately, QAV investors have guidelines to follow during turbulent periods, so we just keep doing what we are doing and remember what we learned from the Hitchhiker’s Guide.  

 AORD 2022-01-31

Still, it’s not all doom and gloom. As of this morning, the top stock tips we’ve made in the last few months include:

  • KRM is up 60% since we recommended it on 20/9/21
  • GWR is up 50% since we recommended it on 13/12/21!
  • MHJ is up 59% since recommended on 28/9/21
  • SFR is up 11% since recommended on 18/10/2021
  • CIA is up 19% since recommended on 29/12/2021!
  • ATP is up 33% since recommended on 15/11/2021 
  • IMA up 15% since we recommended it on 02/11/2021 

Of the 41 stocks we have recommended since September, 34% are up, 7% are neutral, while the other 58% 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.

Obviously in the current climate it’s difficult to find stocks to recommend, but if you turn over enough rocks there is always something that is bucking the trend. 

 

THIS WEEK’S STOCK RECOMMENDATIONS ARE:

1. Small Cap: WLD

Wellard Limited (XASX:WLD) is a largest cattle exporter and a vertically integrated agribusiness that connects producers of cattle, sheep and other livestock to customers globally through a vertically integrated supply chain. Wellard operates in the beef, sheep meat and dairy industries.

WLD website

Wellard had some problems over the years, involving issues with livestock exports, but recently had an arbitration win with a ship-building firm in Croatia, which considerably boosted their share price.  They also had a qualified audit in 2020 which removed them from our buy list for a while, but that seems to have been resolved. 

WLD chart

Here are the reasons we like WLD this week.

  • Based on the current share price of $0.11, WLD has a quality score of 90% and a QAV score of 0.22
  • Average Daily Trade of $8,000 is very low, making it only suitable for people with a very small amount to invest 
  • Price-to-Operating Cash Flow ratio of 4.14
  • Financial health is strong and recovering
  • Price is less than book + 30% 
  • The current PE is the lowest in six halves 

 2. Large Cap: ALG

Ardent Leisure Group (XASX:ALG) is an owner and operator of leisure and entertainment assets across Australia and the United States. ALG’s business segment includes US Entertainment Centres and Australian Theme parks.

ALG website

While they might be mostly known here for Dreamworld (it’s been five years now since the Thunder River Rapids tragedy but I still think of it every time I drive past the place, but RIP John Longhurst), over 90% of the value of the business is derived from Main Event, a US-based chain of family entertainment centres. Ardent operates 45 Main Event centres across the US and plans to continue expanding.

Some of the reasons we like ALG this week include:

  • Based on the current share price of $1.30, they have a quality score of 64% and a QAV score of 0.10
  • Average Daily Trade is $1,146,000
  • Price-to-Operating Cash Flow is 6.64, a little high, but under our cutoff 
  • Financial health is recovering (post COVID which obviously smashed theme parks around the globe)
  • Current price is lower than the analyst consensus 
  • It has a new three point upturn

 

ALG 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 usually contains 100-200 stocks.

 

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