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Happy Sunday
Every week I run the same scan. Quality companies below their 200-day moving average.
The 200-day is one of those lines that actually matters. When good companies drop below it, long-term money starts looking.
But most stocks below their 200 deserve to be there. Cheap for a reason. So I filter for quality first.
Let’s dig in…
Quality Near Value is What I’m looking for
Every company gets scored on 4 pillars:
1. Profitable - ROIC and ROCE both above 15%. These measure how well a company turns investment into profit. Above 15% means the business actually earns its keep.
2. Cash-Generating - FCF yield above 2%, income quality above 0.7. Earnings on paper are easy to fake. Cash in the bank isn't.
3. Safe - Net Debt/EBITDA under 3, Current Ratio above 1. Translation: debt is manageable and they can pay their bills. Won't blow up in a recession.
4. Consistent - Positive operating income, no weird metrics. The company is actually making money, not just playing accounting games to look good.
6/8 checkpoints or higher makes the cut.
Today’s Sponsor
Investors see ANOTHER return on Masterworks (!!!)
That’s 3 sales this quarter. 26 sales total.
And the performance?
14.6%, 17.6%, and 17.8% → The three most representative annualized net returns.
(See all 26 at Masterworks.com)
Masterworks is the biggest platform for investing in an asset class that hasn’t moved in lockstep with the S&P 500 since ‘95.
In fact, the market segment they target outpaced the S&P overall in that time frame.*
Not private equity or real estate… It’s contemporary and post war art. Crazy, right?
Masterworks investors are typically high net worth, but the point is that you don’t need to be a capital-B BILLIONAIRE to invest in high-caliber art anymore.
Banksy. Basquiat. Picasso and more.
80+ of the world’s most attractive artists have been featured.
511+ artworks offered
$67.5mm paid out as of December 2025
$2.3mm+ average offering size
Looking to update your investment portfolio before 2026?
*Masterworks data. Investing involves risk. Past performance not indicative of future returns. Reg A disclosures at masterworks.com/cd
This Week's List
“Perfect” Scores (8/8)
Company | Ticker | % Below 200 MA |
|---|---|---|
Microsoft | MSFT | -0.2% |
Deckers Outdoor | DECK | -0.9% |
ResMed | RMD | -1.0% |
NetApp | NTAP | -1.2% |
Philip Morris | PM | -1.2% |
Qualys | QLYS | -1.3% |
Garmin | GRMN | -1.5% |
ExlService | EXLS | -1.5% |
Fastenal | FAST | -2.8% |
Logitech | LOGI | -2.9% |
Lennox | LII | -3.1% |
Meta | META | -3.2% |
Kforce | KFRC | -4.3% |
Insulet | PODD | -4.8% |
Grand Canyon Ed | LOPE | -4.9% |
“Strong” Scores (6-7/8)
Company | Ticker | Score | % Below 200 MA |
|---|---|---|---|
Match Group | MTCH | 7/8 | -1.8% |
InMode | INMD | 7/8 | -2.0% |
O'Reilly Auto | ORLY | 6/8 | -2.6% |
Costco | COST | 7/8 | -2.7% |
MercadoLibre | MELI | 7/8 | -4.0% |
Colgate | CL | 7/8 | -4.0% |
Dropbox | DBX | 6/8 | -4.6% |
Negative % = trading below the 200-day MA
What’s Standing Out
DECK stands out. Hoka still growing, UGG prints cash, balance sheet is clean with net cash. Stock's been consolidating around $100 for a long time, coiled below the 200ma.
INMD is the contrarian pick. Got crushed on GLP-1 fears. The thinking: weight loss drugs mean fewer cosmetic procedures. P/E under 7, massive net cash. If that thesis is wrong, I’m buying quality at deep value prices.
This is a watchlist, not a buy list. Make sure to do your own work.
Not financial advice.
- John