#value-investing

#value-investing

The rise of artificial intelligence has distorted stock market valuations, pulling them far from underlying fundamentals. Traders have poured money into AI-related names, driving up prices on the assumption that growth rates will accelerate endlessly without setbacks. This frenzy has left the broader market looking overextended, with the S&P 500 trading at elevated multiples despite uneven economic signals. Yet amid the hype, overlooked quality companies persist - those with solid growth trajectories trading at discounts that scream opportunity.

If you had put $1,000 into the S&P 500 index at the beginning of those 60 years, you'd now have $441,196-a tremendous reward for doing nothing. But if you had put your $1,000 into Berkshire stock, you would now have a truly incredible $59,681,063. Another way to think of it: If you had invested $20,000 back then, you would today be a billionaire. Without doing a thing.

With the market beginning to retreat from all-time highs, now can be a good time to invest in some long-term potential winners. Let's look at three beaten-down stocks you can add today, starting with $1,000 investments. This is a nice starting amount to dip your toe into these stocks, and if they feel any more pressure, you can add to your positions later.

For the most part, the big hedge funds have been mostly net sellers of stocks in recent quarters. And while it may seem ominous to have many smart money managers ringing the register this year, I'd argue that profit-taking and rotating capital into some of the more defensive areas of the market is only smart. Of course, taking a bit of capital off the risk-on AI trade for some cheaper, less-loved names comes with the risk of missing out on additional upside,

It's seldom a good idea to buy shares of a company just because you're looking for a short squeeze. Though pursuing stocks with above-average short interest could grant you a shot at outsized returns if ever share price momentum becomes too much for the shorts to handle, as they cover and run to the hills, I think investors should prioritize the quality of the underlying business first and foremost.

The democratization of investing started with discount brokers slashing commissions and advanced through no-transaction-fee trading on apps like Robinhood ( NASDAQ:HOOD ) and Fidelity. Now, it no longer takes a lot of money to make money on Wall Street, as investors can buy fractional shares with as little as $5 or $10. That opens doors for everyday people to build portfolios without needing thousands upfront. But that doesn't mean buying cheap stocks is always a good idea, since a low price could signal company problems - and certainly steer clear of penny stocks, which carry high risks of fraud and volatility. Sometimes, though, a low share price signals real opportunity.

Shares of the maker of plant-based meat substitutes Beyond Meat ( NASDAQ:BYND) exploded higher by over 1,300% in a few days before crashing back to earth, shattering the quick gains that traders hoped to hang onto. Now that shares of Beyond Meat are right back in the gutter, now off close to 77% from the monthly spike, many investors might be wondering if the hyper-volatile play has any more bullish energy left in the tank and if the latest dip (more like an implosion) is a buying opportunity to get in ahead of meme traders who might be inclined to give the name a second look with the hopes of getting in before another meme-esque spike.

Billionaire investors were quite active in the second quarter, with many of the big names going after a relatively narrow basket of stocks. Undoubtedly, great minds tend to think alike, especially in the world of investment. If one investment legend perceives deep value to be had in a specific stock, there's a good chance that others might also see an opportunity to get a steep discount to intrinsic value.