Is the market about to peak? Will DeepSeek mark the end of the AI bullish cycle? Are tariffs about slash market gains? Is this the time for a Big-Short type of move?
Quite frankly, no one knows - despite all the opinions out there. And, to be even more frank, if you are running your investments chasing these headlines, you're probably in for a rude awakening when the market suddenly flips on its head (trust me, it eventually will).
But here's a dose of good news: none of that should matter if you have your strategy and risk-return proposition correctly aligned with your goals.
This is exactly where InvestingPro members have been getting significant leverage against the market. For less than $9 a month, they have been following a LIVE list of the Most Undervalued and Most Overvalued stocks in the market (now available for local stock markets as well).
*InvestingPro members can jump straight to the list by clicking on the links.
To these investors, the math has proven quite simple:
Risks are high?
- Take profits on some of the most overvalued names you hold.
- Increase your exposure to undervalued, revenue-generating stocks.
- Hold the stocks that are fairly valued.
- Increase your cash holdings for buying unfairly punished names when the market trend turns (hey, Buffett is doing it).
Differently from headlines and individual opinions, the Fair Value score is based on 15+ different industry-recognized financial metrics combined to bring investment-grade analysis for every stock in the market.
That's why it has a proven track record of flagging overpriced stocks before major selloffs, helping investors lock in profits before sentiment turns.
Now, let's dive into some of the latest success cases from our InvestingPro members who followed the Most Overvalued sign and were saved from a 30%+ loss:
1. AMD - Fair Value Helps Lock in Gains Before Chipmaker's Stock Falls Out of Favor
Advanced Micro Devices (NASDAQ:AMD) has been one of the best semiconductor trades of the past decade. Investors who bought in at $2.53 in January 2013 saw the stock skyrocket 8,456%, hitting an all-time high of $211 in March 2024. But after that meteoric rise, the rally lost steam.
The reason? Well, the stock became overvalued, according to our metrics.
Since peaking, AMD has struggled to reclaim its highs, facing strong resistance at $185 in July 2024 and again at $173 in October. Each attempt to break through ended in a sharp selloff, erasing significant gains.
On January 26, 2024, Fair Value flagged AMD as overvalued, predicting a potential 36.07% downside. The stock failed to break out and instead entered a prolonged downtrend, ultimately losing 36.81% over the next 13 months.
Mounting competition only made things worse. AMD’s Q4 earnings disappointed, with a weak outlook for its data center business—an area where it continues to trail AI computing giant Nvidia (NASDAQ:NVDA). Investors grew even more cautious as DeepSeek, a Chinese startup with a cheaper alternative, entered the market.
Now, after a prolonged downturn, is AMD finally nearing a buying opportunity? Tracking Fair Value’s assessment of the stock near current price levels could help answer that question.
Moving on to our next stock on the list, here’s how the stort for Boeing’s stock played out.
2. Boeing: Fair Value Call a Picture-Perfect Warning
Few stocks generate as much controversy as Boeing (NYSE:BA). But while headlines focused on its troubles, Fair Value had already picked on the company's financial troubles before the stock plunged.
On December 16, 2023, the tool flagged a -32.17 % downside, and Boeing’s stock followed suit, tumbling off a cliff and going on to shed nearly 31% in 14 months.
This was no fluke. The Fair Value tool identified a stock whose fundamentals couldn’t justify its steep climb. At the time, Boeing was grappling with persistent financial struggles, and the company’s challenges were only getting worse.
Before the drop, Boeing’s Q3 earnings underscored its ongoing troubles. The company had endured 19 consecutive quarters of disappointing results. Its defense segment, a key business unit, posted just $474 million in operating profit on $129 billion in revenue—an anemic 0.4% margin.
The selling pressure accelerated after a high-profile safety incident rattled investors. A fuselage section tore off a brand-new Boeing 737 Max 9 mid-flight, forcing an emergency landing. While the 171 passengers and six crew members landed safely, the incident was a stark reminder of Boeing’s quality control issues.
These Are Not Isolated Cases
InvestingPro members who followed our models were able to spot hundreds of other losers before their fortunes turned, saving them from a serious wipeout.
Check out these other real-world cases that occurred in the exact same timeframe as the other two stocks cited above:
Five Below, Inc. (NASDAQ:FIVE)
- Previous Fair Value (FV) Date: 06/06/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -57.83%
- Actual correction: -49.97%
Getty Images Holdings Inc (NYSE:GETY)
- Previous Fair Value (FV) Date: 12/22/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -47.44%
- Actual correction: -49.05%
Quantumscape Corp (NYSE:QS)
- Previous Fair Value (FV) Date: 01/05/2024
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -47.23%
- Actual correction: -42.58%
e.l.f. Beauty, Inc. (NYSE:ELF)
- Previous Fair Value (FV) Date: 02/04/2024
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -45.04%
- Actual correction: -48.57%
Rogers Corporation (NYSE:ROG)
- Previous Fair Value (FV) Date: 06/09/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -44.32%
- Actual correction: -42.89%
Verve Therapeutics Inc (NASDAQ:VERV)
- Previous Fair Value (FV) Date: 11/04/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -39.97%
- Actual correction: -44.61%
NET Power Inc (NYSE:NPWR)
- Previous Fair Value (FV) Date: 09/06/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -39.48%
- Actual correction: -41.45%
Transocean Ltd. (NYSE:RIG)
- Previous Fair Value (FV) Date: 03/30/2023
- Current Date: 02/05/2025
- Fair Value downside signaled (from Previous Date): -39.39%
- Actual correction: -40.00%
Conclusion
The past has shown that blindly chasing market momentum can lead to painful losses, especially when stocks trade well above their intrinsic value.
The key to long-term success? Making data-driven decisions based on a stock’s true worth—not hype or speculation.
InvestingPro’s Fair Value tool has consistently helped investors avoid overhyped stocks before major corrections. Its advanced financial modeling—similar to what analysts at top investment banks use—cuts through the noise to highlight both overvalued and undervalued opportunities.
So, don’t wait until the next market selloff to take action. Subscribe to InvestingPro now for less than $9 a month and get real-time access to the most overvalued stocks today.