The year 2024 brought a modern peak FTSE100 and rising indexes across the pond. Despite this, I am still looking for bargain stocks to buy for my portfolio.

I will continue this in 2025. Here’s how to do it.

First things first. What exactly Is opportunity?

Maybe I could buy a stock for less than its asset value. This was the approach Warren Buffett took early in his career. As surprising as it may seem, some stocks are even now trading at a price lower than the value of their assets. In fact, when investors talk about mutual funds trading at a discount to net asset value, this is exactly what they mean.

However, I would rather find a stock to buy at a bargain price compared to what I expect it to be worth in the long run.

Step two: finding brilliant companies

Therefore, I look for companies that I believe have a sustainable competitive advantage in a field where I expect powerful demand in the long term.

Thousands of companies are listed on stock exchanges in the UK and the USA. Most of them I don’t understand – and in many cases I don’t even understand the exact business area they’re in.

So I stick to mycircle of competences” as Buffett puts it, and focus on businesses that I think I can handle.

Step three: Spotting a valuation gap in my favor

However, even a brilliant business can be a indigent investment. If I overpay for a share relative to its intrinsic value, I may find myself in a situation where my share is worth less than I paid for it, even though the company continues to grow profits.

So I look for situations where I can buy shares at a much lower price than I think they are worth.

Sometimes I get it wrong. For example, a price crash after a earnings warning can sometimes seem like a buying opportunity, but later turns out to be a harbinger of trouble for the company. What looks like a bargain may be a value trap.

That’s why I focus on companies with proven business models that I believe have good long-term prospects.

Putting theory into practice

For example, this year I invested Crocs (NASDAQ:CROX).

After growing 162% in five years, it may seem like Crocs isn’t a bargain at all. In reality, however, the stock is trading at a price-to-earnings ratio of less than eight.

The footwear market is here for the long haul, if you’ll pardon the pun. Crocs has a powerful brand, distinctive design and competitive production costs. I hope that by expanding its offerings it has overcome what I see as a key risk that its shoes will fall out of favor with buyers with the changing winds of fashion.

Risks remain that lend a hand explain the low price, such as ongoing sales challenges for the company Hey, man mark.

However, when looking for stocks to buy, I focus on long-term potential, not short-term sales trends. I will continue to utilize this approach as I search the market for opportunities through 2025.