We have two stocks to bring to your attention to this week. These recommendations are based on data from Sunday 6 Feb 2022.
The market has been a little more positive over the last week, although it’s still a long way off the highs seen in early January.
Maybe everyone has been listening to hair metal? I know this always puts me in a good mood.
Of the 43 stocks we have recommended since September, 42% are up, 14% are neutral, while the other 44% 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: OEL
Otto Energy Limited (XASX:OEL) is oil and gas exploration, development, production and sales in North America. Otto currently have oil production from its SM 71 oil field in the shallow water Gulf of Mexico (Louisiana) and gas/condensate production from its Lightning discovery onshore Matagorda County, Texas.
Here are some of the reasons OEL ranks well on our scorecard this week.
- Based on the current share price of $0.014, OEL has a quality score of 73% and a QAV score of 0.22
- Average Daily Trade of $39,000 is low, making it only suitable for people with a small amount to invest
- Price-to-Operating Cash Flow ratio of 3.31
- Financial health is recovering
- Price is less than the consensus analyst intrinsic value and less than Book + 30%
- It has a new three point upturn
2. Large Cap: ASX
ASX Limited (XASX:ASX) operates Australia’s primary national securities exchanges. This include the provision of securities exchange services, derivatives exchange services, central counterparty clearing services, and registry, settlement, and delivery-versus-payment clearing financial products and associated ancillary services. It also provides market data services and investor education courses.
While it’s fairly low down on our buy list, it’s the highest-rated large cap that we haven’t already recommended. The key to its positive score is really its low Price-to-Operating Cash Flow. So if you need to invest in a large cap, and you already own the ones we’ve recommend in the past, this one is worth looking at.
Here are some of the reasons ASX ranks well on our scorecard this week.
- Based on the current share price of $84.56, they have a quality score of 38% (which is quite low) but a final QAV score of 0.12
- Average Daily Trade is $32,753,000
- Price-to-Operating Cash Flow is 3.18
- Financial health is strong and steady
- It’s a Star Stock on Stock Doctor
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.