The stock market has been all over the place this year. But things suddenly seem to be going right all at once.

A stock market melt-up is the opposite of a crash. And investors need to think about this as a real possibility.

Tail risks? What tail risks?

Here’s the list of threats to the stock market identified by fund managers surveyed by Bank of America in April:

Source: HedgeFundTips

The most obvious point is that things are far more stable in the Middle East than they were. And there’s reason to think this might continue.

An offensive around Kharg Island – or anywhere in the Persian Gulf – is difficult between May and September. The heat makes it incredibly hard. The US has also been using ammunition faster than it can produce it. That also acts as a deterrent to continued hostilities.

It’s never wise to dismiss the threat of a stock market crash entirely. But I think investors need to be alive to the idea that the next big move might be up.

The big question is what to do. Getting ready for a melt-up doesn’t mean buying indiscriminately. But it does involve thinking carefully.

What should investors do?

The thing to do is to figure out what stocks are worth. That helps give an indication of what might still be worth buying if things do go higher.

One way to do this is with a reverse discounted cash flow (DCF) calculation. It helps investors figure out how much it’s reasonable to pay for a stock.

A reverse DCF analysis uses two inputs. The first is a desired rate of return and the second is the company’s enterprise value and cash flows.

From this it calculates an implied growth rate. And investors can assess whether or not they think this is plausible.

One stock I’ve been thinking about is Informa (LSE:INF). It’s a FTSE 100 company that organises trade shows and conferences. I’ve been buying the stock recently. But will it still be cheap if it surges 20% from here?

Valuation

Informa has an enterprise value of 13.94bn and made £849m in free cash in 2025. My desired rate of return from the stock is 9%.

If the stock surges 20%, the enterprise value will reach £16.08bn. On that basis, the required growth rate is 3.5% a year.  I think that’s highly achievable. Informa’s trade shows are industry leaders and have some very attractive unit economics.

A global recession might threaten sales in any given year. And the firm has heavy exposure to the Middle East, which is obviously a risk.

The firm is targeting 5% annual sales growth and earnings per share to increase by 8% a year. That’s over the medium term.

Those numbers are well ahead of what I think the company needs to do. So I expect to keep buying even if the stock market rips higher.