# Stock Evaluator V3

> Comprehensive evaluation of potential stock investments combining valuation analysis, fundamental research, technical assessment, and clear buy/hold/sell recommendations. Use when the user asks about buying a stock, evaluating investment opportunities, analyzing watchlist candidates, or requests stock recommendations. Provides specific entry prices, position sizing, and conviction ratings.

- Skill: `danstrem2/stock-evaluator-v3` (Agent Skill, multi-file: 6 files)
- Install (CLI): `npx skillmds@latest add danstrem2/stock-evaluator-v3`
- Raw SKILL.md: https://api.skillmd.com/api/skills/danstrem2/stock-evaluator-v3/raw
- Safety review: pending (external: skill-scanner PASS, skillspector PASS)
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Research & Search
- Author: danstrem2 (https://skillmd.com/u/danstrem2)
- Updated: 2026-09-09
- Page: https://skillmd.com/skills/danstrem2/stock-evaluator-v3

---


# Stock Evaluator (Enhanced)

## ⚠️ CRITICAL: MANDATORY DELIVERABLES CHECKLIST
Every analysis MUST include ALL of these:
- ☐ **Technical Analysis** (price action, indicators, key levels, Ichimoku Cloud)
- ☐ **Fundamental Analysis** (business, financials, competitive position)
- ☐ **Advanced Financial Metrics** (F-Score, Z-Score, M-Score, Max Drawdown, Value Trap Score)
- ☐ **Investor Persona Scores** (8 legendary investor frameworks)
- ☐ **Valuation Assessment** (multiple methods with margin of safety)
- ☐ **Bull vs. Bear Case** (both sides with balance assessment)
- ☐ **Clear Recommendation** (BUY / HOLD / SELL with conviction rating)
- ☐ **Alternative Candidates** (if SELL: provide 3-5 better alternatives)
- ☐ **Enhanced Quant-Style Dashboard** (React dashboard with 60+ metrics, Ichimoku, investor personas, TOP NEWS, and key notes)

**If you cannot complete any item, STOP and ask for clarification.**

---

## ⚠️ CRITICAL: DATA INTEGRITY RULES

### ZERO FABRICATION POLICY
**NEVER fabricate, estimate, or hallucinate ANY numeric data point.** Every metric in the dashboard MUST come from:
1. A web search result with a cited source
2. Company filings (10-K, 10-Q, earnings reports)
3. Official financial data providers

**If data cannot be found → Use "N/A" or "--"**

### MANDATORY WEB SEARCHES (minimum per analysis)

You MUST perform these searches before populating the dashboard:

| Search # | Query Template | Data Retrieved |
|----------|---------------|----------------|
| 1 | "[TICKER] stock price market cap P/E ratio" | Price, Market Cap, P/E |
| 2 | "[TICKER] ROE ROA profit margin 2024 annual report" | Financial ratios |
| 3 | "[TICKER] revenue growth earnings growth FY2024" | Growth rates (REPORTED) |
| 4 | "[TICKER] Piotroski F-Score" | F-Score (or calculate) |
| 5 | "[TICKER] insider trading SEC Form 4 2025" | Insider buys/sells |
| 6 | "[TICKER] short interest percentage float" | Short interest |
| 7 | "[TICKER] RSI MACD 50-day 200-day moving average beta volatility" | Technical indicators |
| 8 | "[TICKER] analyst price target consensus" | Analyst targets |

### DATA SOURCE HIERARCHY

Use sources in this priority order:
1. **Official company filings** (SEC EDGAR, company investor relations)
2. **Exchange data** (NYSE, NASDAQ, LSE official)
3. **Verified financial data** (Yahoo Finance, Google Finance, MarketWatch)
4. **SEC Form 4** (for insider trading ONLY)
5. **FINRA/exchange** (for short interest ONLY)

### PROHIBITED
- Using training knowledge for ANY specific current numbers
- Analyst reports (per user preference)
- Estimates without sourcing
- "Common knowledge" assumptions

### HANDLING UNAVAILABLE DATA

| Situation | Action | Display |
|-----------|--------|---------|
| Metric not found after searching | Display "N/A" | `value: "N/A"` |
| Data is outdated (>1 year old) | Note the date | `value: "15.2% (2023)"` |
| Conflicting sources | Use most authoritative | Note in analysis |
| Calculated metric (F-Score) | Show calculation | Explain in text |
| Insider data unavailable | Show "N/A" | `insBuys: "N/A"` |

**CRITICAL: Zero means "zero occurred" - NEVER substitute zeros for missing data.**

---

## STANDARDIZED METRIC LABELS

Use these EXACT labels in the dashboard (matches reference screenshots):

### Row 1: PRICE & VALUATION | FINANCIAL PERFORMANCE
| Label | Notes |
|-------|-------|
| Price: | $XX.XX or €XX.XX |
| Market Cap: | $XXB or €XXB |
| Trailing P/E: | XX.XX |
| Forward P/E: | XX.XX |
| Subsector P/E: | XX.XX or N/A |
| PEG (1Y): | X.XX with benchmark (<1) |
| ROE: | XX.XX% with benchmark (>20%) |
| ROA: | XX.XX% with benchmark (>10%) |
| Profit Margin: | XX.XX% with benchmark (>20%) |
| Operative Margin: | XX.XX% with benchmark (>20%) - NOTE: "Operative" not "Operating" |
| Gross Margin: | XX.XX% with benchmark (>40%) |
| ROIC: | XX.X% with benchmark (>15%) |

### Row 2: GROWTH METRICS | RISK INDICATORS
| Label | Notes |
|-------|-------|
| Revenue (YoY): | XX.XX% with benchmark (>10%) - REPORTED only |
| Earning (YoY): | XX.XX% with benchmark (>0%) - REPORTED only |
| EPS (TTM): | $X.XX |
| Forward EPS: | $X.XX |
| Growth Rates: | Capped: X.X% / Uncapped: X.X% |
| Analyst Target: | $XX.XX |
| CRS (0-1): | X.XX with benchmark (Medium) |
| Debt/Equity (mrq): | X.XX with benchmark (0.5-1) |
| Piotroski F: | X with benchmark (≥7) |
| Altman Z: | X.XX with benchmark (>3) |
| Beneish M: | X.XX with benchmark (<-1.78) |
| Value Trap: | XX (Label) |

### Row 3: LIQUIDITY & FREE CASH FLOW | INSIDER & SENTIMENT & CLASS
| Label | Notes |
|-------|-------|
| Current Ratio: | X.XX with benchmark (1-2) |
| Cash: | $X.XB |
| Debt: | $X.XB or N/A |
| FCF Growth 5Y: | XX.X% with benchmark (>5%) |
| FCF Yield: | X.XX% with benchmark (>4%) |
| FCF Margin: | XX.XX% with benchmark (>15%) |
| Payout Ratio: | XX.XX% with benchmark (<50%) |
| Buys (12M): | X - from SEC Form 4 or N/A |
| Sells (12M): | X - from SEC Form 4 or N/A |
| Net Shares (12M): | +/-XXK - from SEC Form 4 or N/A |
| Short Int (%): | X.X% |
| Sentiment / Articles: | +X.XXX / XX (Positive/Negative) |
| Stock: [Type] + Div Yield: | Combined: "Stock: Growth" + "Div Yield: X.XX%" |
| Sector/Industry: | Combined: "Sector / Industry" |

### Row 4: QUALITY SCORES | MOAT & OTHER
| Label | Notes |
|-------|-------|
| CQVS: | XX.XX with benchmark range |
| Label: | Strong/Moderate/Weak |
| Valuation: | XX.XX |
| Quality: | XX.XX |
| Strength: | XX.XX |
| Integrity: | XX.XX |
| Buffett Moat: | X with benchmark (4-7) |
| Greenblatt (MF): | EY: X.X% / ROC: X.X% or N/A |
| Beta: + Vol 1Y: | Combined: "Beta: X.XX" + "Vol 1Y: XX.X%" |
| Earnings Predict.: | XX.X% with benchmark (>80%) |
| Drawdown (5Y): | -XX.X% with label (Low/Mid/High) |
| Completeness: + Data Quality: | Combined: "XX.X%" + "High/Medium/Low" |

---

## STANDARDIZED BENCHMARKS (Single Source of Truth)

Use these EXACT thresholds for color coding:

| Metric | Green (Good) | Yellow (Neutral) | Red (Warning) |
|--------|--------------|------------------|---------------|
| **ROE** | >20% | 10-20% | <10% |
| **ROA** | >10% | 5-10% | <5% |
| **Profit Margin** | >20% | 10-20% | <10% |
| **Operative Margin** | >20% | 10-20% | <10% |
| **Gross Margin** | >40% | 25-40% | <25% |
| **ROIC** | >15% | 8-15% | <8% |
| **Debt/Equity** | <1 | 1-2 | >2 |
| **Current Ratio** | 1-2 | 0.5-1 or 2-3 | <0.5 or >3 |
| **Piotroski F** | ≥7 | 4-6 | ≤3 |
| **Altman Z** | >2.99 | 1.81-2.99 | <1.81 |
| **Beneish M** | <-2.22 | -2.22 to -1.78 | >-1.78 |
| **PEG (1Y)** | <1 | 1-2 | >2 |
| **RSI (14)** | 30-50 | 50-70 | >70 or <30 |
| **Short Interest** | <5% | 5-10% | >10% |
| **FCF Yield** | >5% | 2-5% | <2% |
| **FCF Margin** | >15% | 10-15% | <10% |
| **Dividend Yield** | >2% | 1-2% | <1% or >8% |
| **Value Trap** | 0-39 | 40-59 | 60-100 |
| **Max Drawdown** | >-30% | -30% to -50% | <-50% |
| **Revenue Growth** | >10% | 0-10% | <0% |
| **Earnings Growth** | >0% | -10% to 0% | <-10% |

---

## Overview

This skill provides institutional-grade evaluation of potential stock investments. Unlike portfolio analysis which reviews existing positions, this skill evaluates stocks you're **considering buying** or **deciding whether to purchase**.

The evaluation answers:
- **Should I buy this stock?**
- **At what price should I enter?**
- **How much should I allocate?**
- **What's my upside and downside?**
- **When should I sell?**

### Default Currency: € (Euro)
All monetary values in the dashboard should be displayed in **Euro (€)** as the default currency:
- Price: €42.13
- Market Cap: €78.3B
- Analyst Target: €56.45
- Entry/Stop/Target prices: €38, €35, €56
- EPS values: €1.39, €1.91

### IMPORTANT: Use REPORTED Growth Rates
For the dashboard metrics **"Rev Growth"** and **"Earn Growth"**:
- **USE REPORTED GROWTH** - not underlying, adjusted, or organic figures
- Reported figures reflect actual GAAP/IFRS numbers including FX, acquisitions, disposals
- This provides a more accurate picture of what investors actually received
- Example: If underlying growth is 7% but reported is 2.2%, use **2.2%**
- Same for earnings: Use reported EPS growth, not adjusted EPS growth

## Core Purpose

**Stock Evaluator** is for:
- ✅ Evaluating potential investments BEFORE buying
- ✅ Analyzing watchlist candidates
- ✅ Getting buy/hold/sell recommendations with specific prices
- ✅ Comparing multiple investment opportunities
- ✅ Finding better alternatives to current consideration

**NOT for:**
- ❌ Reviewing existing portfolio positions (use Portfolio Analyst skill)
- ❌ General stock market questions
- ❌ Stock screening or discovery from scratch
- ❌ Options, derivatives, or crypto analysis

## Evaluation Framework

### Five Pillars of Stock Evaluation

**1. Valuation Assessment**
- Is the stock undervalued, fairly valued, or overvalued?
- Multiple valuation methods (DCF, relative, Peter Lynch, asset-based)
- Margin of safety requirement (15-30%)
- Fair value estimate with confidence range

**2. Quality Analysis**
- Business model strength and competitive moat
- Financial health and trends (5-10 year view)
- Management quality and capital allocation
- Industry position and competitive advantages

**3. Timing Assessment**
- Technical setup and entry points
- Near-term catalysts and events
- Market sentiment and positioning
- Optimal entry price range

**4. Position Sizing**
- Allocation recommendation (% of portfolio)
- Based on conviction, risk, and diversification
- Maximum allocation limits
- Risk-adjusted sizing

**5. Conviction Rating**
- **Strong Buy**: High conviction, clear undervaluation, low risk
- **Buy**: Good opportunity, reasonable valuation, moderate risk
- **Hold**: Fairly valued, no compelling reason to buy now
- **Avoid**: Overvalued, significant risks, or better alternatives exist

---

## Value Trap Indicator

### What It Is
A Value Trap is when a stock appears undervalued (low P/E, low P/B) but is actually cheap for valid fundamental reasons. The stock keeps declining despite appearing "cheap."

### Value Trap Score Calculation (0-100, LOWER = more genuine, HIGHER = more trap)

**Components to evaluate (ADD points for trap indicators):**

**1. Price Momentum (25 points max)**
- 6-month price change vs market: If underperforming by >20%, ADD 15-25 points
- 12-month price change: Sustained decline = ADD 10-20 points
- If price momentum is POSITIVE: ADD 0 points

**2. Earnings Quality (25 points max)**
- EPS trend (3 years): Declining = ADD 10-25 points
- Revenue trend: Declining = ADD 5-15 points
- Margin trend: Compressing = ADD 5-10 points
- If earnings quality is STRONG: ADD 0 points

**3. Balance Sheet Health (25 points max)**
- Debt levels increasing? ADD 5-15 points
- Cash flow negative or declining? ADD 10-20 points
- Working capital deteriorating? ADD 5-10 points
- If balance sheet is HEALTHY: ADD 0 points

**4. Valuation Context (25 points max)**
- Is low multiple justified by declining fundamentals? ADD 10-25 points
- Compare current fundamentals to when multiple was higher
- If fundamentals justify valuation: ADD 0 points

### Scoring Formula
```
Value Trap Score = Momentum Penalty + Quality Penalty + Balance Sheet Penalty + Valuation Penalty
```
(Score ranges from 0 to 100, where 0 = definitely genuine value, 100 = definite value trap)

### Score Interpretation
- **0-19**: Genuine Value (likely undervalued, fundamentals intact) - GREEN
- **20-39**: Probably Genuine (minor concerns, monitor) - LIGHT GREEN
- **40-59**: Caution Zone (mixed signals, proceed carefully) - YELLOW
- **60-79**: Likely Trap (multiple red flags) - ORANGE
- **80-100**: Strong Trap Signal (avoid) - RED

### Display Format
```
Value Trap: 21 (Genuine)
```
Color coding: green <40, yellow 40-60, red >60

---

## Investor Persona Scores

Score each stock against 8 famous investor philosophies (0-10 scale). This helps users understand what type of investor the stock suits.

### 1. Warren Buffett Score
Based on "The Warren Buffett Way" - seeks durable competitive advantages

**Key metrics weighted:**
- ROE (>20%): 2 points
- Profit margin (>15%): 2 points
- Free cash flow positive & growing: 2 points
- Moat strength (brand, pricing power): 2 points
- Predictable earnings: 2 points

**Buffett likes:** Predictable businesses, pricing power, low capex needs, consistent profitability

### 2. Charlie Munger Score
Based on "Poor Charlie's Almanack" - mental latticework, inversion thinking

**Focus on:** What could go WRONG (inversion principle)

**Scoring:** Start at 10, subtract penalties:
- High debt (D/E > 2): -3 points
- Volatile earnings: -2 points
- Poor management history: -2 points
- No competitive moat: -2 points
- Accounting red flags: -3 points

### 3. Ray Dalio Score
Based on "Principles" - All-Weather portfolio, economic machine understanding

**Key metrics:**
- D/E ratio < 1: 2 points
- Beta < 1: 2 points
- Stable margins across cycles: 2 points
- Low earnings volatility: 2 points
- Recession resistance history: 2 points

**Dalio likes:** Deleveraging plays, operational efficiency, cycle resilience

### 4. Peter Lynch Score
Based on "One Up on Wall Street" - GARP (Growth at Reasonable Price)

**Primary metric: PEG Ratio (P/E ÷ Growth Rate)**
- PEG < 0.5: 10 points
- PEG 0.5-1.0: 8 points
- PEG 1.0-1.5: 6 points
- PEG 1.5-2.0: 4 points
- PEG > 2.0: 2 points

**Adjustment factors:**
- +1 if earnings growing consistently
- +1 if business easy to understand
- -1 if declining industry

### 5. Benjamin Graham Score
Based on "The Intelligent Investor" - Margin of Safety

**Graham criteria (2 points each, max 10):**
- P/E < 15
- P/B < 1.5
- Current ratio > 2
- Positive earnings 10 years
- Dividend paid 20+ years

### 6. Joel Greenblatt Score
Based on "The Little Book That Beats the Market" - Magic Formula

**Combines two rankings:**
- Earnings Yield (EBIT/EV): Higher = better
- Return on Capital (EBIT/Net Fixed Assets + Working Capital): Higher = better

**Scoring:** Combined rank in top 10% = 10 points, scaled down

### 7. John Templeton Score
Based on contrarian, global value investing

**Key factors:**
- Trading at multi-year lows: +3 points
- Out of favor with analysts: +2 points
- Strong fundamentals despite pessimism: +3 points
- Global perspective (non-US opportunity): +2 points

### 8. George Soros Score
Based on "The Alchemy of Finance" - Reflexivity

**Key factors:**
- Momentum and trend strength: 3 points
- Macro tailwinds: 3 points
- Market perception shifting: 2 points
- Inflection point catalyst: 2 points

**Soros likes:** Macro plays, reflexive situations, trend participation

### Display Format
Show 8 badges around radar chart with scores and color coding:
- Green (7-10): Strong fit
- Yellow (4-6.9): Moderate fit
- Red (0-3.9): Poor fit

---

## Enhanced Technical Analysis

### Ichimoku Cloud Analysis

**Components to Calculate:**
- **Tenkan-sen (Conversion Line):** (9-period high + 9-period low) / 2
- **Kijun-sen (Base Line):** (26-period high + 26-period low) / 2
- **Senkou Span A:** (Tenkan-sen + Kijun-sen) / 2, plotted 26 periods ahead
- **Senkou Span B:** (52-period high + 52-period low) / 2, plotted 26 periods ahead
- **Chikou Span (Lagging Span):** Current close plotted 26 periods back

**Cloud (Kumo):** Area between Senkou Span A and B

**Signals to Identify and Display:**
- **TK Bullish Cross:** Tenkan-sen crosses above Kijun-sen (bullish) - mark with ◆
- **TK Bearish Cross:** Tenkan-sen crosses below Kijun-sen (bearish) - mark with ◆
- **Kumo Twist Bullish:** Cloud changes from red to green - mark with ◆
- **Kumo Twist Bearish:** Cloud changes from green to red - mark with ◆
- **Price vs Cloud:** Above cloud (bullish), Below cloud (bearish), In cloud (neutral)

### Dual PEG Ratios
- **PEG (1Y):** P/E ÷ 1-Year Forward Growth Estimate
- **PEG (5Y):** P/E ÷ 5-Year Historical Growth Rate
- Both provide different perspectives on growth valuation

### FCF Margin
- **Formula:** Free Cash Flow / Revenue × 100
- **Benchmark:** >15% is excellent, >10% is good
- Shows cash generation efficiency relative to sales

### News Sentiment & Short Interest
- **News Sentiment:** -1 to +1 scale based on recent article sentiment
- **Short Interest:** % of float sold short (>10% = high, <5% = low)
- Both indicate market sentiment and potential squeeze/reversal

---

## Fundamental Analysis Process

### 1. Business Understanding (Always First)

**What to Analyze:**
- What does the company do? (products, services, business model)
- Revenue sources and breakdown
- Target customers and markets
- Competitive advantages (moat sources)
- Market position and share
- Industry dynamics and trends

**Management Evaluation:**
- CEO background, tenure, track record
- CFO and key executives
- Capital allocation decisions (dividends, buybacks, acquisitions, R&D)
- Management compensation alignment
- Insider trading patterns (buying is bullish signal)
- Leadership quality from earnings calls and letters

**Competitive Position:**
- Market share and trends
- Key competitors (identify 3-5 direct peers)
- What differentiates this company?
- Sustainable competitive advantages?

### 2. Financial Analysis (5-10 Year View)

**Research Process Order:**
1. **Latest 10-K first** - Understand current business and recent results
2. **Go back 5-10 years through historical 10-Ks** - Understand evolution
3. **Review last 2-3 years of 10-Qs** - Current trajectory
4. **Examine proxy statements** - Governance and compensation

**Key Metrics to Analyze:**

**Quality Benchmarks:**
- ROE > 15% (return on equity)
- Profit Margin > 15%
- Gross Margin > 30%
- Debt < Annual Revenue
- Positive and growing Free Cash Flow
- Revenue growth over 5 years (inflation-adjusted)

**Trends to Assess:**
- Revenue growth trajectory (accelerating/stable/decelerating?)
- Margin expansion or contraction (why?)
- Cash flow consistency and quality
- Balance sheet strength (debt levels, liquidity)
- Return on invested capital (ROIC)
- Working capital management

**Red Flags:**
- Declining margins despite revenue growth
- Negative or inconsistent free cash flow
- Debt growing faster than cash generation
- Losing market share
- Chronic guidance misses
- Accounting irregularities

### 3. Competitive Moat Assessment

**Moat Strength: Wide / Narrow / None**

**Evaluate Sources:**
- **Network effects**: Product improves with more users?
- **Brand loyalty**: Pricing power from brand strength?
- **Switching costs**: Difficult/expensive to switch?
- **Regulatory barriers**: Licenses, patents, regulations?
- **Cost advantages**: Scale, technology, location?
- **Intangible assets**: Patents, trademarks, proprietary data?

**Moat Durability:**
- How long can advantages be sustained?
- What could erode the moat?
- Is moat strengthening or weakening?

**Peer Comparison:**
Compare this company's moat vs. 3-5 direct competitors:
- Market share trends
- Profitability metrics (margins, ROE)
- Growth rates
- Financial strength

### 4. Advanced Financial Health Metrics

Beyond basic quality metrics, calculate these advanced scores for deeper insight:

**Piotroski F-Score (Financial Strength)**

**Purpose**: 9-point score measuring financial strength across profitability, leverage, and operating efficiency.

**Scoring (0-9, higher is better):**

*Profitability (4 points):*
- ROA > 0: +1
- Operating Cash Flow > 0: +1
- ROA improving YoY: +1
- Cash Flow from Operations > Net Income (quality of earnings): +1

*Leverage/Liquidity (3 points):*
- Long-term debt decreasing YoY: +1
- Current ratio improving YoY: +1
- No new shares issued in past year: +1

*Operating Efficiency (2 points):*
- Gross margin improving YoY: +1
- Asset turnover ratio improving YoY: +1

**Interpretation:**
- **8-9**: Excellent financial health
- **6-7**: Good financial health
- **4-5**: Adequate financial health
- **0-3**: Weak financial health

**Altman Z-Score (Bankruptcy Risk)**

**Purpose**: Predicts probability of bankruptcy within 2 years.

**Formula (for public manufacturing companies):**
Z = 1.2(A) + 1.4(B) + 3.3(C) + 0.6(D) + 1.0(E)

Where:
- A = Working Capital / Total Assets
- B = Retained Earnings / Total Assets
- C = EBIT / Total Assets
- D = Market Cap / Total Liabilities
- E = Sales / Total Assets

**Interpretation:**
- **Z > 2.99**: Safe Zone (low bankruptcy risk)
- **Z 1.81-2.99**: Grey Zone (moderate risk)
- **Z < 1.81**: Distress Zone (high bankruptcy risk)

**Note**: Adjust for non-manufacturing companies (different coefficients).

**Beneish M-Score (Earnings Manipulation Detection)**

**Purpose**: Identifies likelihood of earnings manipulation.

**Key Indicators (simplified approach):**
- Days Sales Outstanding Index (increasing = warning)
- Gross Margin Index (declining = warning)
- Asset Quality Index (increasing = warning)
- Sales Growth Index (excessive growth = warning)
- Depreciation Index (declining = warning)
- SG&A Index (disproportionate change = warning)
- Leverage Index (increasing = warning)
- Total Accruals to Total Assets (high = warning)

**Interpretation:**
- **M-Score > -1.78**: Likely manipulator (RED FLAG)
- **M-Score < -1.78**: Unlikely manipulator (clean)

**Practical Check (if full M-Score unavailable):**
- Are accruals consistently high relative to cash flow?
- Is DSO rising faster than revenue?
- Are margins declining with revenue growth?
- Any accounting restatements or auditor changes?

**Max Drawdown (5-Year)**

**Purpose**: Measures largest peak-to-trough price decline.

**Calculation:**
- Identify highest price in past 5 years
- Find lowest subsequent price before recovery
- Max Drawdown % = (Low - High) / High × 100

**Interpretation:**
- **0-20%**: Low volatility (defensive stock)
- **20-40%**: Moderate volatility (typical stock)
- **40-60%**: High volatility (cyclical/growth)
- **>60%**: Extreme volatility (speculative)

**Consolidated Scores**

**Strength Score (0-100):**
Composite of:
- Financial metrics (F-Score contribution)
- Profitability (ROE, margins)
- Growth rates
- Market position

**Integrity Score (0-100):**
Composite of:
- M-Score (earnings quality)
- Cash flow vs. earnings alignment
- Accounting practices
- Management transparency

**Predictability Score (0-100):**
Composite of:
- Revenue consistency (low volatility)
- Earnings consistency
- Business model stability
- Cyclicality assessment

**Data Quality Score (0-100):**
- Completeness of financial data
- Recency of filings
- Auditor quality
- Disclosure transparency

### 5. Risk Analysis

**Company-Specific Risks:**
- Execution risk (can management deliver?)
- Competition risk (share loss, new entrants)
- Product concentration (single product dependency)
- Customer concentration (few large customers)
- Key person risk (CEO dependency)
- Financial distress risk (Z-Score assessment)
- Earnings quality risk (M-Score assessment)

**Industry Risks:**
- Disruption (technology or business model)
- Cyclicality (economic sensitivity)
- Regulation (policy changes)
- Commoditization (pricing power erosion)
- Structural decline (secular headwinds)

**Macro Risks:**
- Economic (recession, inflation, rates)
- Geopolitical (trade wars, conflicts)
- Currency (FX exposure)
- Market (valuation levels, sentiment)

**Overall Risk Level: Low / Moderate / High**

**Consolidated Risk Score:** (0-1 scale, lower is better)
- Incorporates: Z-Score, volatility, leverage, earnings quality
- <0.30: Low Risk
- 0.30-0.60: Moderate Risk
- >0.60: High Risk

---

## Valuation Assessment

Use **multiple valuation methods** - synthesize into fair value estimate.

### Required Valuation Methods

**1. DCF Analysis (Discounted Cash Flow)**
- Project free cash flows (5-10 years)
- Apply appropriate discount rate (WACC)
- Calculate terminal value
- Include margin of safety: 15-30%
- Sensitivity analysis with different assumptions

**2. Relative Valuation**
- Compare to 3-5 direct peer companies
- Key multiples: P/E, EV/EBITDA, Price/Sales, Price/Book
- Adjust for growth differentials
- Consider industry-specific multiples
- Use both current and historical peer averages

**3. Peter Lynch Fair Value**
- Growth-at-reasonable-price framework
- Compare P/E to growth rate (PEG ratio)
- Fair value when P/E ≈ growth rate
- Adjust for quality factors

**4. Asset-Based (When Applicable)**
- For REITs, financials, asset-heavy companies
- Book value or replacement cost
- Net asset value calculations

### Valuation Synthesis

**Fair Value Estimate: €X.XX**

Weight each method appropriately:
- DCF: 40% (if reliable cash flows)
- Relative: 30% (peer comparison)
- Peter Lynch: 30% (growth-adjusted)

**Margin of Safety:**
- **Current Price vs. Fair Value**: X% discount/premium
- **Required**: Minimum 15% margin of safety
- **Adequate**: 15-30% margin of safety
- **Excellent**: >30% margin of safety

**Valuation Conclusion:**
- **UNDERVALUED**: >15% below fair value (buy opportunity)
- **FAIRLY VALUED**: Within ±15% of fair value (hold)
- **OVERVALUED**: >15% above fair value (avoid/sell)

---

## Technical Analysis (Entry Timing)

Focus on identifying optimal entry points, not full technical analysis.

### Key Technical Elements

**1. Price Action (Last 30-60 Days)**
- Current trend: Uptrend / Downtrend / Range-bound
- Recent price pattern
- Volume trends (increasing on rallies?)
- Momentum assessment

**2. Key Levels**
- **Support levels**: Where buying interest emerges
  - Primary support: €X.XX
  - Secondary support: €X.XX
- **Resistance levels**: Where selling pressure increases
  - Primary resistance: €X.XX
  - Secondary resistance: €X.XX

**3. Technical Indicators**
- **RSI** (Relative Strength Index):
  - >70 = Overbought (may pullback)
  - <30 = Oversold (potential bounce)
  - 40-60 = Neutral
- **MACD** (Moving Average Convergence Divergence):
  - Bullish crossover / Bearish crossover / Neutral
  - Momentum accelerating or decelerating?
- **Moving Averages**:
  - 50-day MA: €X.XX (price above/below?)
  - 200-day MA: €X.XX (trend indicator)

**4. Entry Assessment**
- **Technical Setup**: Bullish / Neutral / Bearish
- **Optimal Entry**: Wait for pullback to support / Buy at market / Wait for breakout
- **Entry Price Range**: €X.XX - €X.XX
- **Avoid Above**: €X.XX (poor risk/reward)

---

## Bull vs. Bear Case Analysis

**MANDATORY**: Every analysis must present both sides fairly.

### Bull Case (Optimistic Scenario)
**Potential Upside: +X% to €X.XX**

1. [Key bull argument 1 with specific evidence]
2. [Key bull argument 2 with specific evidence]
3. [Key bull argument 3 with specific evidence]

**For this to play out:**
- [Required condition 1]
- [Required condition 2]

### Bear Case (Pessimistic Scenario)
**Potential Downside: -X% to €X.XX**

1. [Key bear argument 1 with specific evidence]
2. [Key bear argument 2 with specific evidence]
3. [Key bear argument 3 with specific evidence]

**This happens if:**
- [Risk trigger 1]
- [Risk trigger 2]

### Balance Assessment
**Which case is more probable: [Bull / Bear / Balanced]**

[Explanation of why one case is more likely, considering:
- Quality of evidence for each side
- Historical precedent
- Management track record
- Industry dynamics
- Current valuation]

---

## Investment Recommendation Structure

### BUY Recommendation Criteria
- Fair value >15% above current price (adequate margin of safety)
- Strong or improving fundamentals
- Reasonable or bullish technical setup
- Identifiable catalysts
- Acceptable risk level
- Conviction: Strong Buy or Buy

### HOLD Recommendation Criteria
- Fair value within ±15% of current price
- Stable fundamentals, no compelling catalyst
- Better opportunities may exist elsewhere
- Wait for better entry price
- Conviction: Hold

### SELL/AVOID Recommendation Criteria
- Fair value <-15% below current price (overvalued)
- Deteriorating fundamentals
- Significant risks
- Better alternatives available
- Must provide 3-5 alternative candidates
- Conviction: Avoid

---

## Position Sizing Framework

**Allocation recommendation based on:**

**Conviction + Risk = Position Size**

**Strong Buy (High Conviction, Low Risk):**
- Position size: 5-8% of portfolio
- Maximum: 10%

**Buy (Moderate Conviction, Moderate Risk):**
- Position size: 3-5% of portfolio
- Maximum: 7%

**Speculative/High Risk:**
- Position size: 1-3% of portfolio
- Maximum: 5%

**Considerations:**
- Diversification needs (avoid sector concentration)
- Correlation with existing holdings
- Overall portfolio risk
- Liquidity requirements
- User's risk tolerance (from project context)

---

## Entry and Exit Strategy

### Entry Strategy

**NO scale-in strategies** - recommend single entry approach:

**If BUY:**
- **Ideal Entry Price: €X.XX - €X.XX** (optimal range)
- **Maximum Buy Price: €X.XX** (above this, risk/reward unfavorable)
- **Approach:**
  - "Buy now at market" (if currently at good price)
  - "Wait for pullback to €X.XX support" (if extended)
  - "Buy on break above €X.XX" (if breakout setup)
  - "Don't buy above €X.XX" (if overvalued)

### Exit Strategy

**Price Target (12-month):** €X.XX (+X% upside)
- Conservative: €X.XX
- Base case: €X.XX
- Optimistic: €X.XX

**Stop Loss:** €X.XX (-X% maximum loss)
- Technical stop: Below key support
- Fundamental stop: If thesis breaks

**Sell If (Thesis-Breaking Conditions):**
1. [Specific fundamental deterioration]
2. [Specific competitive threat]
3. [Specific valuation threshold]

**Hold Duration:**
- Expected timeframe: [6-12 months / 1-3 years / 3-5+ years]
- Based on investment type (swing trade vs long-term hold)

---

## Catalyst Identification

Identify specific events that could drive stock performance.

**Near-Term (0-6 months):**
- Upcoming earnings: [Date]
- Product launches: [Event]
- Regulatory decisions: [Expected timing]
- Industry events: [Conference, data release]

**Medium-Term (6-18 months):**
- Market expansion plans
- New product cycles
- Margin expansion initiatives
- Strategic partnerships

**Long-Term (18+ months):**
- Structural industry trends
- Market share gains
- Technological leadership
- Business model evolution

---

## Key Analytical Constraints

**Critical Principles:**

1. **No Press/News for Fundamental Analysis**
   - Use company filings only (10-K, 10-Q, 8-K, proxy)
   - Use earnings call transcripts
   - Do NOT rely on news articles or press releases
   - Exception: News for recent developments, but verify in filings

2. **Magnitude Over Precision**
   - Focus on stocks with good margin of safety (>15%)
   - Don't need perfect forecasts
   - Better to be approximately right than precisely wrong
   - Conservative assumptions better than optimistic

3. **Long-Term View**
   - Analyze 5-10 year trends, not just recent quarters
   - Temporary setbacks vs. structural problems
   - Sustainable competitive advantages matter most
   - Short-term noise vs. long-term signal

4. **Compare Apples to Apples**
   - Benchmark against 3-5 direct competitors
   - Not just broad market indices
   - Industry-specific metrics and norms
   - Adjust for company size and maturity

5. **Intellectual Honesty**
   - Acknowledge limitations and unknowns
   - Present both bull and bear cases fairly
   - Say "I don't know" when appropriate
   - Update views when evidence changes

---

## Output Template

```markdown
# [SYMBOL] - [Company Name] Evaluation

## ⚠️ DELIVERABLES CHECKLIST ✓
☑ Technical Analysis Complete
☑ Fundamental Analysis Complete
☑ Valuation Assessment Complete
☑ Bull vs. Bear Case Complete
☑ Clear Recommendation: **[BUY / HOLD / SELL]**
☑ Alternative Candidates: [If SELL, list 3-5 alternatives below]

---

## 📊 Executive Summary

[2-3 sentence bottom-line assessment with key reasoning]

**Recommendation: [BUY / HOLD / SELL]**
**Conviction: [Strong Buy / Buy / Hold / Avoid]**

---

## 💰 Valuation Assessment

**Fair Value Estimate: €X.XX** (Current: €X.XX)
- **Margin of Safety: X%** [Adequate >15% / Insufficient <15%]
- **Valuation: [UNDERVALUED / FAIRLY VALUED / OVERVALUED]**

| Valuation Method | Fair Value | vs. Current | Weight |
|-----------------|-----------|-------------|--------|
| DCF Analysis | €X.XX | +X% | 40% |
| Peer Relative | €X.XX | +X% | 30% |
| Peter Lynch | €X.XX | +X% | 30% |
| **Weighted Average** | **€X.XX** | **+X%** | **100%** |

**Assumptions:**
- DCF: [Key assumptions - growth rate, margins, discount rate]
- Margin of safety applied: X%

---

## 🏢 Business & Competitive Analysis

### What They Do
[2-3 paragraph business model summary:
- Core products/services
- Revenue breakdown
- Target markets
- Business model]

### Competitive Advantages
**Moat Strength: [Wide / Narrow / None]**

1. **[Advantage 1]**: [Detailed explanation with evidence]
2. **[Advantage 2]**: [Detailed explanation with evidence]
3. **[Advantage 3]**: [Detailed explanation with evidence]

**Moat Durability:** [How sustainable are these advantages? 3-5 years? 10+ years?]

### Management Quality Assessment
**Overall Rating: [Excellent / Good / Adequate / Concerning]**

- **CEO**: [Name] - [Background, tenure]
  - Track record: [Achievements/concerns]
  - Capital allocation: [Shareholder-friendly? Smart acquisitions?]
- **CFO**: [Name] - [Financial stewardship]
- **Insider Trading**: [Recent buying/selling activity]
- **Key Insight**: [Overall management assessment]

### Competitive Position

**Market Position:**
- Market share: X% (#X in industry)
- Share trend: [Gaining / Stable / Losing]

**Key Competitors:** [List 3-5 direct peers]

**Peer Comparison:**
| Company | Mkt Cap | Revenue Growth | Profit Margin | ROE | P/E | Moat |
|---------|---------|---------------|---------------|-----|-----|------|
| [Target] | €XB | X% | X% | X% | X.X | [Rating] |
| [Peer 1] | €XB | X% | X% | X% | X.X | [Rating] |
| [Peer 2] | €XB | X% | X% | X.X | X.X | [Rating] |
| [Peer 3] | €XB | X% | X% | X% | X.X | [Rating] |

**Competitive Assessment:** [Is this the best company in the sector?]

---

## 📈 Financial Health Analysis

### Quality Metrics vs. Benchmarks

| Metric | Current | 1Y Ago | 3Y Ago | 5Y Ago | Target | Status |
|--------|---------|--------|--------|--------|--------|--------|
| ROE | X% | X% | X% | X% | >15% | [✓/✗] |
| Profit Margin | X% | X% | X% | X% | >15% | [✓/✗] |
| Gross Margin | X% | X% | X% | X% | >30% | [✓/✗] |
| Revenue Growth | X% | X% | X% | X% | >0% | [✓/✗] |
| Debt/Revenue | X.X | X.X | X.X | X.X | <1.0 | [✓/✗] |
| FCF | €XM | €XM | €XM | €XM | Positive | [✓/✗] |

### Advanced Financial Health Scores

**Piotroski F-Score: X/9** [Excellent 8-9 / Good 6-7 / Adequate 4-5 / Weak 0-3]

*Profitability:* X/4
- ROA positive: [✓/✗]
- Operating CF positive: [✓/✗]
- ROA improving: [✓/✗]
- CF > Net Income: [✓/✗]

*Leverage:* X/3
- Debt decreasing: [✓/✗]
- Current ratio improving: [✓/✗]
- No dilution: [✓/✗]

*Efficiency:* X/2
- Margin improving: [✓/✗]
- Turnover improving: [✓/✗]

**Assessment:** [Detailed interpretation of F-Score]

**Altman Z-Score: X.XX** [Safe >2.99 / Grey 1.81-2.99 / Distress <1.81]
- **Bankruptcy Risk:** [Low / Moderate / High]
- **Interpretation:** [Explanation of Z-Score and financial stability]

**Beneish M-Score: X.XX** [Clean <-1.78 / Warning >-1.78]
- **Earnings Quality:** [High / Moderate / Questionable]
- **Red Flags:** [List any concerning indicators or state "None"]

**Max Drawdown (5Y): -X%** [Low <20% / Moderate 20-40% / High 40-60% / Extreme >60%]
- **Volatility Assessment:** [Low/Moderate/High volatility explanation]
- **Peak price:** €X.XX ([Date])
- **Trough price:** €X.XX ([Date])

### Consolidated Scores

**Strength Score: X/100** (Financial power and market position)
**Integrity Score: X/100** (Earnings quality and transparency)
**Predictability Score: X/100** (Business consistency)
**Data Quality Score: X/100** (Information completeness)

**Overall Quality Rating: [Elite / Strong / Good / Adequate / Weak]**

### Financial Trends (5-10 Year View)

**Revenue:**
- [Trend description: growth rate, consistency, drivers]
- [Any concerning patterns?]

**Margins:**
- Gross margin: [Expanding / Stable / Declining]
- Operating margin: [Trend]
- Net margin: [Trend]
- Drivers: [Why are margins moving this way?]

**Cash Flow:**
- Operating cash flow: [Trend and quality]
- Free cash flow: [Consistency, conversion]
- Capital allocation: [Dividends, buybacks, capex, acquisitions]

**Balance Sheet:**
- Debt levels: [Conservative / Moderate / High]
- Liquidity: [Strong / Adequate / Concerning]
- Trend: [Strengthening / Stable / Weakening]

### 🚩 Red Flags
[List any concerning trends or issues, or state "None identified"]

---

## 📉 Technical Analysis & Entry Timing

### Price Action (Last 30-60 Days)
- **Current Price**: €X.XX
- **52-Week Range**: €X.XX - €X.XX
- **30-day Change**: [+/-X%]
- **Trend**: [Uptrend / Downtrend / Range-bound]
- **Volume**: [Increasing / Decreasing / Normal]

### Key Technical Levels

**Support Levels:**
- **Primary Support: €X.XX** - [Significance/reason]
- **Secondary Support: €X.XX** - [Significance/reason]

**Resistance Levels:**
- **Primary Resistance: €X.XX** - [Significance/reason]
- **Secondary Resistance: €X.XX** - [Significance/reason]

### Technical Indicators

**RSI**: X.X [Overbought >70 / Neutral 30-70 / Oversold <30]
**MACD**: [Bullish crossover / Bearish crossover / Neutral]
- Interpretation: [Momentum assessment]

**Moving Averages:**
- 50-day MA: €X.XX - Price is [above/below]
- 200-day MA: €X.XX - Price is [above/below]
- Golden/Death Cross: [Any recent crossovers?]

### Entry Assessment

**Technical Setup: [Bullish / Neutral / Bearish]**

**Optimal Entry Strategy:**
- [Buy now at market / Wait for pullback to €X.XX / Buy on breakout above €X.XX]
- **Ideal Entry Range: €X.XX - €X.XX**
- **Maximum Buy Price: €X.XX** (avoid above this)

**Momentum: [Strong Bullish / Bullish / Neutral / Bearish / Strong Bearish]**

---

## ⚖️ Bull vs. Bear Case

### 🐂 Bull Case
**Potential Upside: €X.XX (+X%)**

1. **[Bull Argument 1]**: [Specific evidence and reasoning]
2. **[Bull Argument 2]**: [Specific evidence and reasoning]
3. **[Bull Argument 3]**: [Specific evidence and reasoning]

**For this to play out:**
- [Required condition 1]
- [Required condition 2]

**Probability: [High / Moderate / Low]**

### 🐻 Bear Case
**Potential Downside: €X.XX (-X%)**

1. **[Bear Argument 1]**: [Specific risk and reasoning]
2. **[Bear Argument 2]**: [Specific risk and reasoning]
3. **[Bear Argument 3]**: [Specific risk and reasoning]

**This happens if:**
- [Risk trigger 1]
- [Risk trigger 2]

**Probability: [High / Moderate / Low]**

### ⚖️ Balance Assessment

**Which case is more probable: [Bull / Bear / Balanced]**

[2-3 paragraph explanation of:
- Weight of evidence for each side
- Historical precedent
- Management track record
- Industry dynamics
- Current valuation
- Risk/reward assessment]

---

## ⚠️ Risk Analysis

**Overall Risk Level: [Low / Moderate / High]**

### Key Risks

**1. [Risk Category - e.g., Competition Risk]**: 
[Specific risk and potential impact. Probability: High/Medium/Low]

**2. [Risk Category - e.g., Execution Risk]**: 
[Specific risk and potential impact. Probability: High/Medium/Low]

**3. [Risk Category - e.g., Valuation Risk]**: 
[Specific risk and potential impact. Probability: High/Medium/Low]

**4. [Risk Category - e.g., Macro Risk]**: 
[Specific risk and potential impact. Probability: High/Medium/Low]

### Risk Mitigation
[How does the company/investment address these risks?]
[What reduces the risk in this investment?]

---

## 🎯 Catalysts & Timeline

### Near-Term (0-6 months)
- **[Date]**: [Specific catalyst - earnings, product launch, etc.]
- **[Date]**: [Specific catalyst]

### Medium-Term (6-18 months)
- [Expected development 1]
- [Expected development 2]

### Long-Term (18+ months)
- [Structural trend 1]
- [Structural trend 2]

**Expected Timeline to Target**: [6-12 months / 1-3 years / 3-5+ years]

---

## 💡 Investment Recommendation

### **RECOMMENDATION: [BUY / HOLD / SELL]**
### **Conviction: [Strong Buy / Buy / Hold / Avoid]**

### Rationale
[2-3 paragraph synthesis of entire analysis:
- Why this recommendation?
- What makes it compelling (or not)?
- How does valuation + fundamentals + technicals + 

…(truncated)