BottomUp Risk/Reward
Equity Signal Models
Fundamental stock analysis using the EPP floor framework. Each signal is driven by earnings quality, cross-read composites, and attractiveness ratios — not price targets.
◉ COMPOUNDER AT LOW PRICE
Durable × cheap
Durable business, downside limited, asymmetry favourable
◎ QUALITY, NEUTRALLY VALUED
Durable × fair
Durable business at a fair price; add on weakness
✕ QUALITY, PRICED FOR PERFECTION
Durable × rich
Great business, no margin of safety; trim into strength
◎ CYCLICAL, RISK PRICED IN
Cyclical × cheap
Earnings are the cycle, but the price already discounts it; size small
◐ CYCLICAL, NEUTRALLY VALUED
Cyclical × fair
Cyclical at a fair price; timing, not value
✕ TOO MUCH CYCLE RISK
Cyclical × rich
Cyclical priced on peak earnings or a peak multiple
◐ CHEAP, BUT STRUCTURAL RISK
Structural × cheap
Statistically cheap, but the business faces a live structural threat
✕ STRUCTURAL RISK, NOT CHEAP
Structural × fair/rich
Structural threat and no valuation support
◎ AI-FEAR BASKET
AI-exposed × cheap
Cheap because the market prices AI disruption; the numbers keep refusing it. Own as a basket
◐ AI-EXPOSED, NEUTRALLY VALUED
AI-exposed × fair
Live AI-disruption debate at a fair price; wait for the discount
✕ AI-EXPOSED, NOT CHEAP
AI-exposed × rich
Live AI-disruption debate and no valuation support
◐ TURNAROUND BET
Broken earnings, intact franchise
Franchise intact, earnings broken; pay for the recovery, not the floor
◐ SPECIAL SITUATION
Deal, binary or bond
Deal spread, binary legal/legislative outcome, or a bond
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EPP (Earnings Power Price) = current EPS × min-viable trough P/E. Ratio B = downside to EPP ÷ upside at conservative exit multiple. Primary signal is Method B. All prices in USD. Not financial advice.