So in this case, you might have been tempted to wait and NOT to buy the stock, because it wasn’t fully bullish yet. Especially because the company had just MISSED on earnings a month before… JOE: But remember, the earnings system is deeply flawed. It’s hard to trust what companies say about their earnings anymore. As Bloomberg recently reported, 86% of companies INCREASED their reported income by deliberately NOT using Generally Accepted Accounting Principles. In fact, in 2023 alone, companies reported their income as 29% HIGHER than what it really is. Again, just by taking massive liberties with their own accounting standards. MARC: Exactly my point. So now, let’s go ahead and add our new EQ or “Earnings Quality” filter and see what’s REALLY going on with Zscaler stock. In this case, one click… And the stock pops up with a “VERY HIGH” earnings quality rating on April 6, 2025. See the green hand receiving cash? MOLLY: In other words, EQ was flashing Bullish… JOE: Yes. We built the
MOLLY: A stock right at the edge of going DOUBLE BULLISH, in other words… JOE: Yep, and sure enough… watch what happened next… A 31% gain over the next three weeks – in the immediate aftermath of the fastest market decline in half a decade. MOLLY: Incredible. JOE: And remember, Molly, this works on the downside, too.
For example consider Krispy Kreme… the donut chain. In 2024, the company attracted a lot of positive attention when they announced a partnership with McDonald’s.
EQ filter to show 5 different categories, Molly. Take a look…
MOLLY:
I remember that… Imagine seeing Krispy Kreme at every McDonald’s in America… MARC: Sounds bullish for the company, right? Well, Molly, let’s see what the Power Gauge thinks… One click – and we see a VERY BEARISH Power Gauge rating for Krispy Kreme back on October 21, 2024. Now, that alone
MOLLY: Oh, wow – I love the attention to detail here. EQ offers all the same gradations as your classic ratings… Like “VERY Bullish”… “Neutral-negative” and so on, but now – in terms of earnings quality alone. MARC: Yep. In this case, the VERY HIGH earnings quality on Zscaler would’ve suggested you IGNORE their earnings miss back in March… And take the classic Neutral+ rating as a sign that it was rapidly moving toward a Bullish rating on the Power Gauge as well.
would’ve turned you off from this stock… JOE: But now… Let’s
add our new EQ or “Earnings Quality” filter… Because their most recent earnings report back then wasn’t too bad. Revenue was in line with Wall Street estimates. MOLLY: But that means nothing to you, I’m sure…
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