Stocks of the Week — OEL, ASX

We have two stocks to bring to your attention to this week. These recommendations are based on data from Sunday 6 Feb 2022.

MARKET UPDATE

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.

Our stock tips con­tin­ue to per­form well. As of this morn­ing, the top stock tips we’ve made in the last few months include:

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

 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.