| Signal | Meaning | When to act | Trigger thresholds |
|---|---|---|---|
| HOLD | Quality fundamentals intact — stock remains a strong BetterInvesting-grade position. | No action. Continue to monitor quarterly earnings. | Quality ≥ 6Valuation ≥ 6Not degrading |
| WATCH | Mixed signals — one or more metrics are weakening but not yet critical. | Review at next meeting. Identify the specific concern. | Quality 4–6Any metric borderline |
| REDUCE | Fundamentals weakening or degrading-winner pattern detected. Position should be trimmed. | Consider selling 25–50% of position. Re-evaluate in 1–2 quarters. | Degrading + Quality ≥ 5Quality < 5 or Valuation < 5 |
| EXIT | Significant fundamental deterioration. Position no longer meets BetterInvesting criteria. | Initiate sell process. Present at next club meeting for vote. | Quality ≤ 4Valuation ≤ 4Degrading + Quality ≤ 4 |
The SSG zone model evaluates where the price sits within its 52-week range and applies seven quality filters. It answers: "Is now a good time to buy, hold, or sell this position?"
| Signal | Definition | Action |
|---|---|---|
| SSG: BUY | Price in the lower 25% of 52-week range, U/D ≥ 3:1, uptrend confirmed, valuation reasonable. All or most criteria met. | Strong candidate to add shares or initiate a new position. |
| SSG: WATCH | Price in Buy zone but one or more criteria not met: U/D < 3:1, elevated P/E, Death Cross, negative FCF, or price below EMA200. | Monitor closely. May flip to BUY when criterion resolves. |
| SSG: HOLD | Price in the middle 50% of 52-week range. Not cheap enough to add, not expensive enough to sell. | Hold existing shares. Wait for a better entry or exit opportunity. |
| SSG: SELL | Price in the upper 25% of 52-week range. Stock is near its year high — potential to take gains. | Consider taking partial profits. Confirm with full SSG before club vote. |
| Layer | What it measures | Key thresholds |
|---|---|---|
| 1 · Price Zone | Where in the 52-week high/low range the price sits. Lower 25% = buy zone, upper 25% = sell zone. | ≤ 25%ile → BUY zone25–75%ile → HOLD≥ 75%ile → SELL zone |
| 2 · U/D Ratio | Upside (distance to 52W high) ÷ Downside (distance to 52W low). Measures reward-to-risk from current price. | ≥ 3:1 → meets BI threshold ✓< 3:1 → downgrades BUY → WATCH |
| 3 · Valuation | Trailing P/E categorized as Reasonable/Moderate/Elevated/High. Relative Forward P/E checks if earnings are expected to grow. | < 15 → Reasonable15–25 → Moderate25–40 → Elevated (→ WATCH)> 40 → High (→ HOLD) |
| 4 · Trend | Price vs EMA200 for long-term direction. EMA50 vs EMA200 for Golden/Death Cross confirmation. | Price > EMA200 → Uptrend ✓Price < EMA200 → downgrades BUY → WATCHDeath Cross → downgrades BUY → WATCH |
| 5a · Dividend Yield | Annual dividend as % of price. High yield is an income quality qualifier that can support a borderline BUY. | ≥ 5% → HIGH — supports BUY2–5% → MODERATE< 2% → LOW |
| 5b · FCF Yield | Free Cash Flow ÷ Market Cap × 100. Measures quality of earnings — harder to manipulate than net income. | ≥ 8% → STRONG: upgrades WATCH → BUY5–8% → GOOD2–5% → FAIRNegative → downgrades BUY → WATCH |
| 6 · Momentum | RSI and MACD as final confirmation layer. Oversold RSI in buy zone supports accumulation. Overbought RSI in sell zone adds caution. | RSI < 30 in buy zone → oversold recovery signalRSI > 70 in sell zone → overbought confirmationMACD above signal → bullish crossover |
Measures growth and profitability. Base score: 5. Adjusted up/down by the factors below.
| Factor | Points |
|---|---|
| EPS growth > 15% | +2 |
| EPS growth 8–15% | +1 |
| EPS growth < 0% | −2 |
| Revenue growth > 10% | +1 |
| Revenue growth < 0% | −1 |
| ROE > 15% | +1 |
| ROE < 5% | −1 |
| Profit margin > 10% | +1 |
Measures price attractiveness. Base score: 5. Adjusted by earnings expectations and price ratios.
| Factor | Points |
|---|---|
| PEG ratio < 1.0 | +2 |
| PEG ratio 1.0–1.5 | +1 |
| PEG ratio > 2.5 | −2 |
| PEG ratio 2.0–2.5 | −1 |
| Forward P/E < Trailing P/E | +1 |
| Forward P/E > 120% of Trailing | −1 |
| Price-to-Book < 3 | +1 |
| Price-to-Book > 10 | −1 |
| Metric | Definition | Targets & thresholds |
|---|---|---|
| EPS Growth (YoY) | Year-over-year change in earnings per share. Core BetterInvesting growth indicator. | > 15% → Strong8–15% → Good0–8% → Slow< 0% → Declining |
| Revenue Growth (YoY) | Year-over-year change in total revenue. Confirms that EPS growth has a real sales foundation. | > 10% → Strong5–10% → Moderate< 0% → Contracting |
| P/E Ratio (Trailing) | Price ÷ trailing 12-month earnings per share. Measures how much the market pays per $1 of current earnings. | < 15 → Reasonable15–25 → Moderate25–40 → Elevated> 40 → High |
| Relative Forward P/E | Forward P/E ÷ Trailing P/E. Values < 1.0 mean the market expects earnings to grow — the stock is cheaper on a forward basis. | < 0.85 → Strong growth expected ✓0.85–1.0 → Modest growth1.0–1.15 → Flat> 1.15 → Earnings decline expected |
| PEG Ratio | P/E ÷ EPS Growth Rate. Normalises valuation for growth speed. A PEG of 1.0 means the P/E matches the growth rate exactly. | < 1.0 → Undervalued for growth1.0–1.5 → Fairly valued1.5–2.0 → Slightly expensive> 2.0 → Expensive |
| Return on Equity (ROE) | Net income ÷ shareholders' equity. Measures how efficiently management generates profit from the equity base. BetterInvesting target: consistent ROE growth. | > 15% → Strong5–15% → Acceptable< 5% → Weak |
| Profit Margin | Net income ÷ revenue. A wide and stable margin indicates a durable competitive advantage (moat). | > 20% → Exceptional moat10–20% → Quality indicator ✓5–10% → Moderate< 5% → Thin — risk of compression |
| U/D Ratio | (52W High − Price) ÷ (Price − 52W Low). The BetterInvesting reward-to-risk ratio from the current price. Requires ≥ 3:1 to qualify as a buy. | ≥ 3.0:1 → BI buy threshold met ✓1.5–3.0:1 → Below threshold< 1.5:1 → Poor risk/reward |
| 50/200 EMA Cross | Compares the 50-day and 200-day exponential moving averages. The Golden Cross (50 > 200) confirms a long-term uptrend; Death Cross (50 < 200) signals a downtrend. | GOLDEN → Uptrend confirmed ✓FLAT → TransitioningDEATH → Downtrend — downgrades BUY → WATCH |
| Dividend Yield | Annual dividend per share ÷ price × 100. A high yield provides a cash return independent of price appreciation and can support a borderline buy signal. | ≥ 5% → HIGH — income qualifier ✓2–5% → MODERATE< 2% → LOW |
| FCF Yield | Free Cash Flow ÷ Market Cap × 100. How much free cash the business generates per dollar of market value. STRONG FCF upgrades WATCH → BUY; Negative FCF downgrades BUY → WATCH. | ≥ 8% → STRONG: upgrades WATCH → BUY5–8% → GOOD2–5% → FAIR< 2% → WEAKNegative → downgrades BUY → WATCH |
| RSI (14-day) | Relative Strength Index. Oscillates 0–100. Used as a confirmation layer — not a standalone buy/sell signal. | < 30 → Oversold (recovery candidate)30–70 → Neutral> 70 → Overbought (short-term caution) |
| Degrading Winner | Club-specific flag for stocks that were strong performers but show 3–4 consecutive quarters of decelerating EPS growth and/or revenue compression. Triggers REDUCE or EXIT signal. | EPS deceleration 3–4 quarters → REDUCERev compression + Quality ≤ 4 → EXIT |
| Portfolio Signal | SSG Zone | Interpretation & recommended action |
|---|---|---|
| HOLD | SSG: BUY | Strong position in buy zone — ideal candidate to add shares at a favourable entry. Present at next meeting. |
| HOLD | SSG: HOLD | Quality position, fair price. No action needed — continue holding and monitor fundamentals. |
| WATCH | SSG: BUY | Good zone entry but portfolio fundamentals are mixed. Dig into the specific concern before adding. |
| REDUCE | SSG: SELL | Both frameworks suggest reducing — strong case for selling. Present for club vote. |
| HOLD | SSG: SELL | Fundamentals still intact but price is near year-high. Consider partial profit-taking; full SSG review recommended. |
| EXIT | SSG: WATCH | Fundamental deterioration is the primary driver. Initiate exit process regardless of zone signal. |