MOLLY: Wow, the stock went on to rise 443%... That’s, what – 5 times your money in 2 years. Even during the bear market that followed the dot-com crash… JOE: Correct, and the dot-com crash hardly mattered to Autodesk, because their business model produced HIGH-quality earnings. They were converting 103% of their earnings into cash – which is phenomenal. Crash or no crash, that’s the kind of stock where you can very confidently invest your mattress money and hold on tight. MOLLY: It must be rare to find a stock with that level of cash conversion… JOE: Actually, it happens more often than you’d think. So you have to dig deep to find the “makers” versus the “fakers.” Our brand-new addition to the Power Gauge does that for you… by looking for the tiny fraction of publicly traded companies that light up both BULLISH and EQ HIGH. MOLLY: The elusive “Double Bullish” rating… JOE: Yes. For example, during the dot-com era, just 4 other stocks
JOE: In 2025 alone, we’ve already found stocks with high earnings quality in fields as varied as AI, pet food, financial services and more that have all SOARED… while so much else has been crushed. You just have to filter
out the hype from both the company and Wall Street to see what’s REALLY happening with earnings.
MARC: This gets to why Joe used to be thrown out of those dinner meetings… You see, most companies attract investors by talking up their potential… But what Joe and I have learned is that, boom or no boom, bull or bear market, hot sector or weak sector, a company must be able to convert their earnings into lots of cash. If they can’t do that, they’re toast. And when you see a number close to 100%, that’s the first step toward lighting up our system with an “EQ High” rating. JOE: Right. So that’s the first metric we’ve added to our new Power Gauge filter. Cash conversion of 100% lights up with a HIGH earnings quality.
lit up on the Power Gauge with Double Bullish ratings. Amdocs – a telecom firm that went on to rise 120% in 5 months in the 2003 bear market. Nucor – a steel firm that went on to rise 122% in just over a year… Gilead Sciences – a biotech firm that went on to rise 110% throughout that same bear market… And finally, Apple, which went on to rise 2,673% – long before they released their first iPhone. MOLLY: I’m amazed by the wide range of these stocks…
And on the flipside… Cash conversion close to 0% lights up with LOW earnings quality.
If cash conversion is low, the company might have inventory problems or high receivables that prevent it from producing cash. On Wall Street, I used to call these “money eaters” – and we’d target the worst of them and bet against the stock. Spotted a Historic U.S. Bankruptcy MOLLY: Ahh… so that’s why the companies didn’t want you in their meetings…
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