AInvestor Recommendation: Definition and How It Is Calculated
AInvestor Recommendation is the buy/hold/sell label produced by combining the AInvestor Score, fair value comparisons, and confidence checks into a single actionable recommendation.
How the recommendation is calculated (step-by-step)
- Inputs: primary inputs are the AInvestor Score (0–100), one or more fair value estimates (weighted fair value), current market price, confidence level produced by data validation checks, and industry trend sentiment (positive, neutral, or negative).
- Compute Fair Value Ratio (FVR): FVR = weightedFairValue / currentPrice. FVR > 1 implies the stock may be undervalued, FVR < 1 implies overvaluation.
- Data quality & confidence: verify required data (price, fair value, and score) and use the confidence level. If confidence is low or key inputs missing, the recommendation is downgraded or marked as not actionable.
- Base decision rules: combine score and FVR using threshold logic. Example base logic: Strong Buy (Score ≥ 80 and FVR > 1.05), Buy (Score ≥ 70 and FVR > 1.05), Hold (Score 50–69 or FVR 0.65–1.05), Sell (Score 35–49 or FVR < 0.9), Strong Sell (Score < 35 and FVR < 0.75).
- Industry trend adjustments: apply sector sentiment to borderline cases only. Positive industry trend: upgrade borderline cases. Negative industry trend: downgrade borderline cases. Neutral industry trend: no adjustment applied.
- Output: the produced recommendation includes label (Strong Buy/Buy/Hold/Sell/Strong Sell), reason string (score, FVR, and industry trend summary), the fair value ratio, confidence level, industry sentiment, and any data-quality flags for downstream UI use.
Notes
- Recommendations are automated and should be used as a starting point for research, not as sole decision criteria.
- Different products or viewers may vary thresholds or weighting; always check the component breakdown.
- The UI surfaces confidence and breakdowns so users can understand which inputs drove the recommendation.
Practical notes
AInvestor Recommendation combines multiple valuation signals (score, fair value, and sentiment) into a single actionable label, making it easier for investors to make quick decisions. However, it should always be used as a starting point for deeper analysis rather than a sole decision criterion.
See How AInvestor Recommendations Perform
Curious about how these recommendations work in practice? Explore the stocks we recommend and check their backtest performance: