Investors often find themselves caught off guard by sudden market downturns, watching their profits evaporate as stock prices tumble. But what if there was a way to identify overvalued stocks before they crash? What if you could exit at the right time—or even profit by shorting stocks that are primed for a decline?
This is exactly where knowing a stock’s fair value becomes a game-changer.
A Real-World Example: Bajaj Auto’s 32.8% Drop
Let’s rewind to September 28, 2024. Bajaj Auto Limited (NSE:BAJA) was soaring, trading at INR 12,666 per share. Many investors were riding the momentum, unaware that the stock was significantly overvalued. However, those who had access to precise fair value calculations knew something crucial—Bajaj Auto’s fair value was INR 8,511.4, indicating a steep downside risk of 32.8%.
Image Source: Investing.com
Fast forward to January 20, 2025, and the inevitable happened. The stock collapsed to its fair value, erasing a massive chunk of investor wealth. Those who had access to this insight exited in time, avoiding painful losses. Even better, short sellers who acted on this overvaluation signal capitalized on the decline, making a fortune in the derivatives market.
Fair Value: A Must-Have Investing Tool
Fair value isn’t just another stock metric—it’s the key to staying ahead of the market. It helps investors see beyond market hype and determine whether a stock is fairly priced, overvalued, or undervalued—all without manually crunching numbers or running financial models.
This automated valuation process is highly precise, using multiple financial models to arrive at a realistic intrinsic value. With this knowledge, investors can confidently:
- Exit overvalued stocks before a crash
- Identify high-potential undervalued stocks
- Profit from short-selling opportunities
Don’t Be the Last to Know
Imagine having this insight before your portfolio takes a hit. Investors who rely on guesswork often regret missing such opportunities—but those who use data-backed fair value insights position themselves for maximum gains and minimum losses.
And here’s the best part—for a very limited time, InvestingPro is offering up to 50% off its powerful stock analysis tools, including real-time fair value insights. If you’ve ever thought about taking your investing strategy to the next level, now’s the time.
Don’t wait for the next crash to realize what you’re missing.
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