Markets came roaring back from April lows, ending the first half of 2025 with record highs across the and . But when stocks snap back so quickly, especially with uncertainty still in the air, it raises a key question:
Are your holdings still backed by strong fundamentals?
Experienced investors know that sharp recoveries often mask growing risks. That’s why now is a good time to reassess what you’re holding and whether those stocks still deserve a place in your portfolio.
One approach gaining traction with investors is using valuation-based signals to cut through the noise. For under $7 a month, members are doing exactly that – they’re tracking a live list of the Most Undervalued and Most Overvalued stocks, updated in real time and grounded in fundamentals. These lists now span global and local markets.
Already an InvestingPro member? You can jump straight to the undervalued/overvalued lists by clicking on the links.
InvestingPro’s Fair Value score blends over 17 professional-grade valuation models into one clean number, giving you institutional-level clarity on every stock you own or watch.
That’s why it’s repeatedly flagged overpriced names before major drawdowns—helping investors exit at the right time and protect profits.
Let’s take a look at some recent real-world wins from InvestingPro members who followed the “Most Overvalued” signals and sidestepped combined catastrophic losses of 96%+ on two well-known names:
1. Victoria’s Secret: What Went Wrong After an Impressive Bull Run in 2024?
Victoria’s Secret (NYSE:), once a standout performer during the 2024 bull run, saw its fortunes reverse dramatically in the first half of 2025.
By the end of June, the stock had dropped 49.32%, wiping out billions in shareholder value in just six months, well beyond the projected downside. While the broader market surged to new all-time highs and staged a textbook V-shaped recovery, VSCO failed to rebound alongside the broader market.
So, what happened?
The underlying fundamentals failed to support the stock’s earlier momentum. Gross margins kept declining, pressured by rising input costs and increased need for heavy discounting amid fierce competition. Revenue growth also slowed.
But this decline didn’t come out of nowhere.
As early as December 1, 2024, the InvestingPro Fair Value model had flagged VSCO as significantly overvalued, with a projected downside risk of 40.26%.
While the stock climbed to $48.73 around the time the S&P 500 crossed the 6,000 mark, the Fair Value model had already detected the disconnect between price and fundamentals.
By the end of June 2025, the stock had booked losses of almost 50%.
This highlights a key lesson for long-term investors: price action alone rarely tells the full story. Valuation tools like Fair Value can help detect early warning signs early on, saving investors from a big portfolio drawdown.
2. Trump Media: The Trump Trade That Didn’t Work Out (47% Wipeout)
Trump Media (NASDAQ:) offers a textbook example of the kind of hype-driven stock investors should approach with caution—especially when markets are trading near all-time highs.
Back in December 2024, as speculation around Donald Trump’s potential return to the White House intensified, DJT shares surged to $33.70. But while headlines drove public excitement, InvestingPro’s Fair Value model told a very different story.
Even then, our model flagged DJT as significantly overvalued—highlighting nearly 50% downside risk. And just six months later, that risk materialized: by the end of June 2025, the stock had fallen 46.63% from its peak.
The Fair Value model had already detected the warning signs—rising losses, declining revenue, extreme volatility, and uncertainty around the company’s long-term growth. Even high-profile buybacks and a large cash reserve weren’t enough to offset investor concerns about profitability and business sustainability.
So what can investors learn from DJT’s trajectory?
High-profile names can still pose a high risk. Evaluating the underlying financial health and valuation—as InvestingPro’s Fair Value model does—is key to making smarter, more disciplined investment decisions.
Conclusion
History has repeatedly shown that chasing momentum—without regard for fundamentals—can lead to big portfolio drawdowns.
Whether it’s a stock trading far above its intrinsic value like Victoria’s Secret, or one driven purely by headlines like Trump Media, tools like Fair Value can help investors cut through the noise and spot what’s hype and what isn’t.
Built on 17+ trusted valuation models, it flags overpriced and underpriced Wall Street darlings and also highlights overlooked opportunities across global markets.
So, with correction risks on the rise, now is the perfect time to scan your portfolio holdings for overpriced names.