Stocks of the Week — MFD, BPT

We have two stocks to bring to your attention to this week. These recommendations are based on our analysis using data from Sunday 16 Jan 2022.

MARKET UPDATE

The mar­ket over the last week has been as uncer­tain as the fate of a ten­nis play­er.

 

Our stock tips have con­tin­ued to per­form well though. 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 up 67% since we rec­om­mend­ed it on 13/12/21!
• MHJ up 63% since rec­om­mend­ed on 28/9/21
• ATP is up 33% since rec­om­mend­ed on 15/22/2021
• IMA is up 20% since rec­om­mend­ed on 02/11/2021
• SFR is up 18% since reocm­mend­ed on 18/10/2021
• KIL is up 18% since rec­om­mend­ed on 26/10/21
• CVW is up 14% since rec­om­mend­ed on 4/10/21
• FEX is up 16% since rec­om­mend­ed on 20/12/2021!
• CIA is up 16% since rec­om­mend­ed on 29/12/2021!
• AMI is up 16% since rec­om­mend­ed on 02/11/2021 

Since we start­ed pub­lish­ing our stocks of the week in Sep­tem­ber, about 60% of our picks are either up or neu­tral, while the oth­er 40% 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: MFD

May­field Child­care Lim­it­ed (XASX:MFD) oper­ates day child­care cen­tres locat­ed in Vic­to­ria. May­field Child­care  owns 20 long day child­care cen­tres locat­ed in and around met­ro­pol­i­tan Mel­bourne.

MFD has been on and off our buy list reg­u­lar­ly over the last few years. It has sol­id fun­da­men­tals and, as you can see in the below chart, has done very well since the COVID cough.

It was actu­al­ly our Stock of the Week on 14 Feb 2020 — just before COVID crashed every­thing. Not MFD’s fault, of course. And if you’d bought it then and held on to it, it would have done you right. So it was a good call then and we think it’s still a good call now.

Here are the rea­sons we like MFD this week.

• Based on the cur­rent share price of $1.19, MFD has a qual­i­ty score of 79% and a QAV score of 0.22
• Aver­age Dai­ly Trade of $31,000
• Price-to-Oper­at­ing Cash Flow ratio of 3.59
• Finan­cial health is strong and steady
• Price is less that the ana­lyst con­sen­sus, our IV#1, our IV#1, and book plus 30%
• Div­i­dend yield is high­er than the cur­rent bank rate
• High per­cent­age share own­er­ship by the direc­tors

2. Large Cap: BPT

Beach Ener­gy Lim­it­ed (XASX:BPT) is an oil and gas explo­ration and pro­duc­tion com­pa­ny based in Ade­laide, Aus­tralia. It has oper­at­ed and non-oper­at­ed, onshore and off­shore, oil and gas pro­duc­tion from five pro­duc­ing basins across Aus­tralia and New Zealand and is a key sup­pli­er to the Aus­tralian east coast gas mar­ket.

 

Beach Ener­gy, which is backed by Ker­ry Stokes, is anoth­er of those stocks that come and go from our buy list. We had to remove them from our buy list last May when they had some issues regard­ing their West­ern Flank oper­a­tions which tanked their price. They also had a change of Man­ag­ing Direc­tor last Novem­ber.

But the futures for nat­ur­al gas are cur­rent­ly opti­mistic, and some ana­lysts seem to think this will work in Beach’s favour.

Some of the rea­sons we like BPT this week include:

• Based on the cur­rent share price of $1.40, they have a qual­i­ty score of 87% and a QAV score of 0.21
• Aver­age Dai­ly Trade is $11,729,000
• Price-to-Oper­at­ing Cash Flow is 4.20
• Finan­cial health is strong and steady
• Price is less that the ana­lyst con­sen­sus, our IV#1, and book plus 30%
• It has a new three point upturn
• Pre­dict­ed EPS growth divid­ed by PE is high­er than 1.5
• Our IV#2 is more than twice the cur­rent price

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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.