These 7 nearly perfect stocks in my stock ranking

2026-07-03 · By Lubin Danilo, founder of Lubin Investment

Seven companies I've already analyzed on this site score 9 out of 10 in my quality score: they are missing just one criterion out of ten to reach a perfect score. The missing piece is almost never the same one twice: cash collection, growth, debt, or valuation. Here is what each one lacks, one by one.

Why I started tracking the almost-perfect ones

On my site, every stock I analyze gets a quality score out of 10, based on ten objective financial criteria: profitability, growth, margins, debt, and more. Most companies land somewhere between 4 and 7. Very few climb above 8.

Then there is this smaller group: companies that pass nine criteria out of ten and miss the tenth by a hair. Not flawed bargains, not mythical perfect businesses either: solid companies with exactly one lock left to pick before reaching the top. I pulled together seven of them, all already covered on this site, to see precisely what each one is missing.

• My quality score judges a company on ten financial criteria, kept entirely separate from its share price.
• Seven companies I've already analyzed pass nine out of ten: Paychex, FactSet, Booz Allen Hamilton, Allegion, Erie Indemnity, Jack Henry, and Verisign.
• The missing criterion changes almost every time: slow customer collections for two of them, growth below my threshold for three others, debt or cash conversion for the remaining two.
• None of these seven is a bad business. Each simply misses one strict threshold, not the spirit of the underlying criterion.
• All seven also have a valuation, a price measured in multiples of cash flow, that deserves to be judged separately from their quality.

How my score out of 10 actually works

I judge a company's quality separately from its price, across ten specific criteria: profitability, sales growth, profit growth, free cash flow margin (the share of revenue that turns into cash actually sitting in the bank), return on invested capital, net debt measured against annual cash flow, how long it takes customers to pay their bills, how much of reported profit actually shows up as cash, its buyback policy, and finally the share price measured against that cash.

Each criterion is either validated or not, no half credit. A company that validates all ten becomes a 10 out of 10, a near statistical rarity. Validating nine out of ten is already unusual: most public companies stumble on three, four, sometimes six criteria at once.

9 out of 10 is not a failure

When a company misses exactly one criterion out of ten, that's never random: it's a strict threshold the company almost clears but doesn't quite reach. The nuance matters. A company scoring 5 out of 10 has genuine structural problems. A company scoring 9 out of 10 is an excellent business with one identifiable weak spot, usually minor compared to the strength of everything else.

The interesting question becomes whether that missing criterion is a real problem or just a statistical footnote. Let's go through them one by one.

The table: seven nearly perfect stocks

Here are the seven companies I identified, with their sector, their current valuation as a multiple of free cash flow (P/FCF, the share price divided by the cash the business generates each year), and the exact criterion keeping each one from a perfect score.

Paychex (PAYX): collections that drag on

Paychex runs payroll, HR, and benefits for hundreds of thousands of small and mid-sized American businesses. It is a textbook quality model: recurring revenue, fat margins, and clients who almost never switch payroll providers once they're set up. I go through the details on the Paychex analysis page.

What holds it back comes down to one number: its customer collection period (DSO, days sales outstanding, the average number of days it takes clients to pay their invoices) runs at 71 days, well above the threshold I consider healthy. On top of that, growth is a bit soft for a business of this quality: 7.7% a year in sales and 9.3% in profits, both under my 10% bar.

FactSet Research Systems (FDS): the best business isn't always the best deal

FactSet sells financial analysts and fund managers the terminals and databases that go head to head with Bloomberg. Once a team builds its models and habits around FactSet, it rarely switches, the same dynamic as Paychex, Wall Street edition. More detail on the FactSet analysis page.

FactSet's problem isn't its balance sheet, it's its price. Growth has cooled a bit (7.6% in sales, 8.3% in profits, both under my threshold), and its stock currently trades at 14.31 times its annual free cash flow, above the reasonable buy price I set for this company, around 140.92 dollars. In other words, it's worth owning, just not quite cheap enough for my taste yet.

Booz Allen Hamilton (BAH): debt weighing a bit heavier

Booz Allen Hamilton advises US federal agencies, defense chief among them, on technology, cybersecurity, and artificial intelligence. Its multi-year government contracts give it a visibility few consulting firms can claim. Full breakdown on the Booz Allen Hamilton analysis page.

Two things stand out here. First, its free cash flow margin, at 7.9%, is thinner than the average among stocks scoring a perfect 10 (flagged as a watch item, worth monitoring without being alarming). Second, its net debt measured against annual cash flow reaches 3.64, the highest of the seven companies in this roundup: it would take a bit over three and a half years of cash flow to pay off its debt. Its customer collection period, at 48 days, is comparatively fine.

Allegion (ALLE): growth and collections both lagging

Allegion makes locks, security doors, and access control systems, including under its best known brand, Schlage. It's an unglamorous business that happens to be very profitable: nobody skimps on building security. Full profile on the Allegion analysis page.

Allegion stacks up two separate weak points. Sales growth, at 8.2% a year, sits under my 10% bar. And its customer collection period climbs to 87 days, the worst figure in the group on this exact measure, an outright fail. Its current valuation, 18.67 times free cash flow, also runs above the reasonable buy price I set, below 113.51 dollars.

Erie Indemnity (ERIE): a hair away from perfect

Erie Indemnity has an unusual setup: it doesn't sell insurance directly, it manages, for a fee, the operations of the Erie Insurance Exchange on behalf of its policyholders. That structure shields it from most claims costs while still capturing a cut of the premiums collected. More on the Erie Indemnity analysis page.

Its one hitch: the share of its reported profit that actually turns into cash by year end comes in just under the threshold I consider ideal, at 0.94 (for every dollar of reported profit, 94 cents ends up as real cash). Its fee-based structure also makes a standard customer collection period impossible to calculate with my usual method. Its valuation, 25.25 times free cash flow, sits on watch against my buy threshold of 240.82 dollars.

Jack Henry & Associates (JKHY): growth hitting a ceiling

Jack Henry supplies the core software running thousands of small American banks and credit unions: account management, payments, compliance. Once a bank migrates its core system to Jack Henry, switching becomes a genuine headache, which explains its near total client retention. More detail on the Jack Henry analysis page.

Like FactSet, its weak spot is growth: 7.2% a year in sales, 9.4% in profits, both under my 10% threshold. Its customer collection period, at 36 days, is the best of the seven companies in this list. What's left is its valuation, 15.23 times free cash flow, above my reasonable buy price of 87.68 dollars.

Verisign (VRSN): a monopoly that barely grows anymore

Verisign runs the technical infrastructure behind every .com and .net domain name on earth, a near monopoly position governed by a contract with the US government. Every time a .com site gets registered or renewed, Verisign takes its cut. Full detail on the Verisign analysis page.

The flip side of that monopoly is that it barely grows anymore: Verisign's sales growth, at 5.4% a year, is the weakest of the seven companies in this roundup. Its return on invested capital also isn't calculable in my model, for lack of comparable data for this type of structure. Its valuation, 24.10 times free cash flow, sits above my buy threshold of 169.71 dollars.

What these seven companies teach me

Look at how the misses are spread out. Paychex and Allegion both stumble on customer collections, but for different underlying reasons. FactSet, Jack Henry, and Verisign all stumble on growth, though Verisign does it with the weakest growth in the group for a structural reason (a mature market), while FactSet and Jack Henry are simply cooling off a bit. Booz Allen Hamilton is alone on debt. Erie Indemnity is alone on cash conversion.

There is no single Achilles' heel that defines a nearly perfect stock. My method isn't hunting for one universal flaw, it measures ten independent dimensions, and each company has its own. That's actually reassuring: a company can be outstanding on nine fronts and still have room to improve on a tenth without that being a warning sign. The real work is figuring out which one, and deciding whether it matters to you.

My method, in short

This is exactly the kind of comparison I wanted to be able to run in a few seconds, for any stock, without rereading ten annual reports every time. I built my methodology around this idea: judge quality separately from price, score every criterion without going easy, and treat a company scoring 9 out of 10 as worth as close a look as one scoring a perfect 10.

FAQ

Is a stock scoring 9 out of 10 a good investment?

It depends on the missing criterion and on the price you'd pay. The quality score says nothing about price paid: an excellent business bought too expensive can still be a poor investment until the market catches up to its valuation.

Why doesn't any of these seven companies score a perfect 10?

Because each one crosses one strict threshold I consider important: customer collections running too long, growth under 10% a year, debt above average, or a valuation above my reasonable buy price. None of these flaws is disqualifying, but my criteria don't give anyone a pass.

What exactly is the customer collection period (DSO)?

The average number of days it takes a company's customers to pay their invoices after a sale. The shorter it is, the faster a business turns its sales into cash it can actually use.

What does P/FCF actually mean?

The share price divided by the annual free cash flow the business generates. A P/FCF of 15 means you're paying today the equivalent of 15 years of that cash at the current pace. The lower it is, the cheaper the stock.

Can a 9 out of 10 score change over time?

Yes, the score updates every time a company reports quarterly or annual results. A business can fix its weak spot, for example by accelerating growth, and climb to a perfect 10, or slip on a different criterion instead.

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About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).