Does a perfect quality score protect you from the market?

2026-07-26 · By Lubin Danilo, founder of Lubin Investment

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No. Across the 89 companies that check every one of my quality criteria, one-year stock performance ranges from +183.6% to -65.0%, with a median close to zero. Half went up, half went down. A business's quality and its stock's return remain two separate questions, even at the very top of the ranking.

What I wanted to check

My method rests on a simple idea: judging a company's quality and judging its price are two separate questions. One direct consequence of that idea, rarely tested in black and white, is that a perfect quality score should guarantee nothing about future stock performance. A company can check every one of my criteria and still see its stock collapse if it was already bought too expensive, or if a new worry emerges. I wanted to test this idea against real numbers rather than intuition.

So I took the 89 companies in my tracked universe that currently check every one of my quality criteria (profitability, sales and cash growth, share buybacks, margins, controlled debt, return on capital) and looked at their stock performance over the past twelve months. The result is stark: the gap between the best and the worst is 248.6 percentage points, and a perfect score shows up among both the biggest winners and the steepest drops in my universe.

The big winners: when one theme lifts several perfect scores at once

The four biggest gains are not a statistical coincidence: they all tell, to varying degrees, the same story. Argan builds natural gas power plants, specifically for areas where electricity demand from AI data centers outstrips the existing grid's capacity. Comfort Systems USA installs the cooling and air conditioning systems for those same data centers. Advantest and ASML make the machines used to test and etch the chips that run them. Four different businesses, one shared engine: the AI infrastructure buildout supercycle, which pushed Argan's revenue up 50% year over year and Comfort Systems' up 56% over the same period.

What this cluster shows is that a perfect quality score says a company is solid on paper, but it never says WHEN the market will notice. These four companies were already quality businesses a year ago. What changed is that the market suddenly started paying up for a theme (AI infrastructure) it had been ignoring or underpricing just before.

The steep drops: two different lessons behind the same collapse

Intuit, the maker of TurboTax and QuickBooks, lost more than half its value while my filter keeps rating it perfect on past fundamentals. The reason is not accounting, it is narrative: the market fears generative AI could make a large chunk of its tax preparation business obsolete, with several analysts flagging emerging competition from AI-driven tax platforms. That fear deepened after Intuit reported TurboTax revenue growth of only 7% in fiscal Q3 2026, below market expectations, and announced a roughly 17% workforce reduction to refocus investment on AI. None of that shows up in a five year balance sheet: it is a worry about the future, not a problem of the present.

Doximity, the professional network for American physicians, illustrates a second lesson. Its drop came from a concrete, dated disappointment: the May fiscal Q4 2026 release delivered fiscal 2027 revenue guidance well below analyst consensus, against a backdrop of AI compute costs squeezing margins and a CFO departure in April 2026. Unlike Intuit, this was not a diffuse fear about the future of the business: it was one concrete quarter that disappointed, followed by a wave of analyst downgrades.

The real lesson: quality and price remain two separate questions

Across these 89 companies, 46 gained over the past year and 43 declined, an almost even split, with a median performance close to zero despite an average pulled upward by a handful of very large gains. In other words, knowing that a company checks every one of my quality criteria tells you almost nothing about where its stock is headed over the next twelve months. That is not a flaw in the method, it is exactly what it is meant to do: the quality score measures the solidity of the business, not the market's momentum or mood at any given moment.

That is why I repeat, article after article, that quality and price are two distinct filters that should never be merged. A company that is perfect on my 10 criteria can be an excellent deal if its price stayed reasonable (the case I look for), or a dangerous bet if its price already bakes in years of future growth that are not guaranteed (which seems to have been true for part of the AI cluster before its recent pullback, or for Intuit before the market rediscovered disruption risk). A perfect score is a necessary condition in my method, never a sufficient one.

Find all 89 companies rated at the maximum, with their current valuation, on my 10 out of 10 quality ranking, and how I separate quality from price explained in detail on my methodology page.

• Across 89 companies rated at the maximum of my quality filter, one-year stock performance ranges from +183.6% (Argan) to -65.0% (Doximity), a 248.6 point spread.
• 46 companies gained, 43 declined: an almost even split, with a median performance close to zero.
• The biggest gains (Argan, Comfort Systems, Advantest, ASML) share one engine: the AI infrastructure buildout supercycle (power, cooling, chip manufacturing equipment).
• Intuit fell on a narrative fear (generative AI disrupting its tax business) deepened by disappointing growth and workforce cuts; Doximity fell on a concrete guidance miss and a CFO departure.
• A perfect quality score measures business solidity, never stock momentum: in my method, quality and price remain two strictly separate questions.

FAQ

How was this ranking calculated?

By comparing, for the 89 companies currently checking every one of my quality criteria, the stock price roughly a year ago to the current price, using my screener's monthly price history.

Why did Argan, Comfort Systems, Advantest, and ASML rise so much?

All four benefit from the same theme: the AI infrastructure buildout supercycle, whether that is power generation, data center cooling, or manufacturing the chips that run them.

Why did Intuit fall so much despite a perfect score?

The market fears generative AI could make part of its tax preparation business (TurboTax) obsolete, a fear deepened by below-expectation growth and a roughly 17% workforce reduction announced in 2026.

Does a perfect quality score guarantee a good investment?

No. It guarantees past fundamental solidity, never a good entry price or future stock performance. Quality must always be cross-checked with valuation, which is exactly what my method does in two separate steps.

Should I avoid companies that fell a lot despite a good score?

Not automatically: a drop can create an interesting entry point if the underlying quality remains intact and the market's fear is overblown. But it can also signal a real risk materializing. This is not personalized investment advice, judge case by case.

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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).