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- Some S&P 500 stocks that exploded this year are now dangerously overvalued.
- Others have yet to realize their full potential and could continue to climb.
- How can you easily tell whether a stock is undervalued or overvalued?
- For a limited time, get an InvestingPro subscription at the lowest price of the year with our New Year’s sale.
As 2025 comes to an end, investors are reshaping their portfolios and deciding which stocks to buy for 2026 based on their goals.
Some investors look for stocks that have fallen a lot. They believe these shares were punished too harshly and now trade at attractive prices, with room to recover. This approach is called value investing.
Others focus on stocks that have done well recently. The idea is that strong performers may continue to deliver gains if market conditions stay supportive. This approach is known as momentum investing.
This strategy carries risk. Stocks that have risen sharply can already reflect very optimistic expectations, leaving little room for future gains if earnings or cash flows fail to keep up.
For example, among the 102 S&P 500 stocks that have risen more than 30% since the start of the year, nine carry a downside risk of over 20%, based on InvestingPro Fair Value estimates.
More specifically, these S&P 500 stocks, which have risen between 51.7% and 149.5% this year, now appear overvalued by about 25.4% to 45.7%, based on InvestingPro’s Fair Value estimates.
Note: Fair Value is an InvestingPro tool that combines several well known valuation models to estimate a stock’s true value. It picks the most relevant models for each company and shows whether a stock is trading above or below its underlying fundamental value at any point in time.
Fortunately, among the S&P 500 stocks that have surged this year, Fair Value also points to names that may still have room to run.
Using the Investing.com screener, we identified seven stocks in the index that have already gained more than 30% in 2025 and still show upside of over 20% based on Fair Value estimates.
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In simple terms, these stocks have already risen between 30.8% and 84.9% this year, yet Fair Value models suggest they could still climb another 20.3% to 29.5%.
That makes them worth watching for momentum investors looking for strong stock ideas for 2026.
For value-focused investors, plenty of attractive opportunities also exist within the S&P 500 and beyond. The Investing.com screener helps identify these stocks easily, with ready-made filters designed to highlight companies that trade at appealing valuations.
Please note that some searches are reserved for InvestingPro subscribers with a PRO+ plan.
Please note that some of these pre-configured searches are available only to InvestingPro and Pro+ subscribers.
If you’re not yet an InvestingPro subscriber and want to explore the opportunities mentioned in this article, along with access to InvestingPro tools, you can now take advantage of the 55% off New Year’s sale by clicking the button below.
Finally, please note that the features mentioned in this article are far from being the only InvestingPro tools useful for market success. In fact, InvestingPro offers a wide range of tools that enable investors to always know how to react in the stock market, regardless of market conditions. These include:
- AI-managed stock market strategies that are re-evaluated monthly.
- 10 years of historical financial data for thousands of global stocks.
- A database of investor, billionaire, and hedge fund positions.
- And many other tools that help tens of thousands of investors outperform the market every day!
Tens of thousands of investors are already using InvestingPro to outperform the market. Why shouldn’t you?
Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.