In a market dealing with external shocks, value investing, or the strategy of putting money in underappreciated stocks, is fast gaining popularity. Although these stocks are apparently cheap compared to their peers, investment is made with the hope that the stock price will appreciate reasonably to match the intrinsic value of the business. Several stocks that have surged significantly in the recent past have shown the overwhelming success of this pure-play investment strategy. Here, we discuss three such stocks — Eldorado Gold (NYSE: EGO), Sasol (NYSE: SSL) and DaVita (NYSE: DVA). More on Value Investing While searching for a suitable investment option, value investors with varied risk appetite are unlikely to consider price/earnings to growth ratio among a number of other popular metrics like price/earnings (P/E), price/sales (P/S) or price/book value (P/B). This is because they often find this ratio complicated, considering the limitations in calculating the future earnings growth potential of a stock. Yardsticks such as dividend yield, P/E and P/B are most commonly used to single out stocks trading at a discount. However, these ratios, while not taking into account the future growth potential of a stock, may end up convincing us to invest in stocks that are at a discount just because of their poor show. This may often lead to "value traps" — a situation when these value picks start to underperform over the long run as temporary problems, which, once pulled down the share price, turn out to be persistent. In such a case, even if you buy a stock ...