As 2025 draws to a close, 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 significantly. They believe these stocks have been punished too harshly and are now trading at attractive prices, with room to recover. This approach is called value investing.
Others focus on stocks that have performed well recently. The idea is that top-performing stocks could continue to generate gains if market conditions remain favorable. This approach is known as momentum investing.
This strategy carries risks. Stocks that have risen sharply may already reflect very optimistic expectations, leaving little room for future gains if earnings or cash flow fail to keep up.
For example, among the 102 stocks that are up more than 30% year to date, nine carry more than 20% downside risk, based on InvestingPro Fair Value estimates.
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 the true value of a stock. It selects the most relevant models for each company and shows whether a stock is trading above or below its underlying fundamental value at any time.
Fortunately, among the S&P 500 stocks that have surged this year, Fair Value also points to names that might still have some room to spare.
Using the Investing.com analyzer, we identified seven stocks in the index that have already gained more than 30% in 2025 and are still up more than 20% based on fair value estimates.
Simply put, these stocks are already up between 30.8% and 84.9% this year, but fair value models suggest they could climb another 20.3% to 29.5%.
It’s worth watching for momentum investors looking for solid stock ideas for 2026.
For value investors, many exciting opportunities also exist within the S&P 500 and beyond. The Investing.com filter helps…
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