US stocks look expensive by historical standards. As of late January 2025, the S&P 500’s trailing 12-month P/E ratio was at 30.5—well above its 10-year average of 23.
This stretched valuation can indicate lower future returns, especially when geopolitical uncertainty, tariff concerns, and economic slowdown continue to weigh on sentiment.
Against this backdrop, savvy investors are seeking real value—ditching overextended names before a deeper correction takes hold.
Now, more than ever, managing risk exposure is critical. Relying on headlines and market swings alone won’t cut it—you need a data-driven approach to navigate these uncertain conditions.
That’s exactly where InvestingPro’s Fair Value tool can give investors an edge. For less than $9 a month, members track a live list of the market’s Most Undervalued and Most Overvalued stocks (now covering local markets, too).
Unlike hype-driven narratives, InvestingPro’s Fair Value score is built on 15+ industry-recognized financial metrics. It offers an investment-grade analysis that consistently flags overpriced stocks before major selloffs.
In this article, we will dive into real-world examples of how Fair Value’s well-timed signals helped investors dodge steep losses of 37% and 54% on stocks that soared on hype while their fundamentals lagged far behind.
1. Lattice: Fair Value’s 37% Overvaluation Signal Was Spot On
Lattice Semiconductor’s (NASDAQ:LSCC) post-pandemic rally was nothing short of spectacular. After bottoming out in March 2020, the stock surged over 350%, fueled by booming demand for 5G, AI, and server security solutions.
But not all investors walked away winners. Many who bought into the hype didn’t realize a long-term top was forming. For months, the stock struggled to break above the $87-$97 range.
Eventually, the rally lost steam, and bears took control. The result? A 37% drop as of March 7, 2025, wiping out gains and leaving bag-holders in the red.
By analyzing 17+ industry-recognized valuation models, the tool flagged Lattice Semi as overvalued—predicting a potential 37% downside.
What is the Fair Value tool saying about the stock at current price levels?
Well, it continues to signal overvaluation, with a potential downside of 27% in the offing.
Source: InvestingPro
If past accuracy is any indication, investors would be wise to take Fair Value’s advice into serious consideration.
2. Five Below: Fair Value’s Timely Signal Warned of Disconnect Between Stock Price and Fundamentals
Back in 2022, discount retailer Five Below (NASDAQ:FIVE) struggled against macroeconomic headwinds.
The company, known for selling products priced between $1 and $5, faced rising costs and inflationary pressures that squeezed its margins.
In 2023, Five Below introduced a store-within-a-store concept offering higher-priced products that were still cheaper than those at major retailers.
The strategy aimed to boost margins, but it carried risks.
Amid the stock’s rally, Fair Value flagged potential trouble.
The Fair Value tool identified a disconnect between Five Below’s fundamentals and its soaring share price. On June 6, 2023, it issued a signal warning that the stock was overvalued by a massive 57.83%.
That warning proved prescient. After failing twice to break above $213—right around the Fair Value signal—Five Below’s stock reversed course. As of March 7, 2025, it had tumbled 53.63% from those highs.
Now, the Fair Value tool is signaling a significant undervaluation in Five Below’s stock.
Source: InvestingPro
InvestingPro members didn’t just avoid a few bad bets—they sidestepped hundreds of potential wipeouts.
By following Fair Value’s signals, they spotted struggling stocks before their downturns accelerated.
Here are more real-world examples from the same timeframe as the two stocks mentioned earlier—proof that these weren’t just isolated cases.
Five Below (FIVE)
- Previous Fair Value (FV) Date: 06/06/2023
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -57.83%
- Actual Correction: -56.16%
Lattice Semiconductor (LSCC)
- Previous Fair Value (FV) Date: 07/02/2023
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -36.87%
- Actual Correction: -37.21%
Immunovant (NASDAQ:IMVT)
- Previous Fair Value (FV) Date: 09/27/2023
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -61.21%
- Actual Correction: -53.33%
IDEAYA Biosciences (NASDAQ:IDYA)
- Previous Fair Value (FV) Date: 01/18/2024
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -49.71%
- Actual Correction: -53.90%
QuantumScape (NYSE:QS)
- Previous Fair Value (FV) Date: 01/05/2024
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -47.23%
- Actual Correction: -50.98%
Crispr Therapeutics AG (NASDAQ:CRSP)
- Previous Fair Value (FV) Date: 02/13/2024
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -41.39%
- Actual Correction: -41.89%
Enovix Corporation (NASDAQ:ENVX)
- Previous Fair Value (FV) Date: 12/17/2023
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -46.59%
- Actual Correction: -43.96%
CG Oncology (NASDAQ:CGON)
- Previous Fair Value (FV) Date: 02/13/2024
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -42.60%
- Actual Correction: -43.19%
Manchester United (NYSE:MANU)
- Previous Fair Value (FV) Date: 03/23/2023
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -43.55%
- Actual Correction: -39.77%
Ionis Pharmaceuticals (NASDAQ:IONS)
- Previous Fair Value (FV) Date: 01/03/2024
- Current Date: 03/03/2025
- Fair Value Downside Signaled (from Previous Date): -34.32%
- Actual Correction: -36.81%
Conclusion
Market hype can be deceiving, but data-driven insights offer a crucial edge. As history shows, InvestingPro’s Fair Value tool has consistently flagged mispricings before major selloffs, helping investors sidestep steep losses.
Now, with fresh signals emerging, the question isn’t whether to pay attention—it’s whether you can afford to ignore them.
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.