At a time when volatility strikes every second day, investors often rely on value investing rather than other options like growth or momentum. As soon as other investors start selling their stocks at a cheaper rate in times of market uncertainty, value investors take this as an opportunity to pick good stocks at a discounted price.

Several stocks that have surged significantly in the recent past have shown the overwhelming success of this pure-play investment strategy. Here, we discuss four such stocks — Commercial Metals (CMC Quick QuoteCMC - Free Report) , Global Payments (GPN Quick QuoteGPN - Free Report) , Invesco (IVZ Quick QuoteIVZ - Free Report) and Universal Health Services (UHS Quick QuoteUHS - Free Report) .

However, this apparently simple value investment technique has some drawbacks, and not understanding the strategy properly may often lead to “value traps.” In such a situation, these value picks start to underperform over the long run as the temporary problems, which once drove the share price down, turn out to be persistent.

There are many value investment yardsticks, such as dividend yield, P/E or P/B, which are simple and can single out whether a stock is trading at a discount.

However, for investors looking to escape such value traps, it is also vital to determine where the stock would be headed in the next 12 to 24 months. Warren Buffett advises these investors to focus on the earnings growth potential of a stock. This is where lies the importance of a not-so-popular value investing metric, the PEG ratio.

PEG Ratio at a Glance

The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate

A low PEG ratio is always better for value investors.

While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.

There are some drawbacks to using the PEG ratio. It doesn’t consider the common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.

Here are some of the screening criteria for a winning strategy:

PEG Ratio less than X Industry Median

P/E Ratio (using F1) less than X Industry Median (for more accurate valuation purposes)

Zacks Rank #1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.)

Market Capitalization greater than $1 billion (This helps us to focus on companies that have strong liquidity.)

Average 20-Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)

Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)

Value Score of less than or equal to B: Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1, 2 or 3 (Hold) offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our PEG-Driven Picks

Here are four stocks that qualified the screening:

Commercial Metals: Irving, TX- based Commercial Metals Company manufactures, recycles and markets steel and metal products, related materials and services. It provides these through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the United States and Poland.

CMC currently has a Zacks Rank #1 and a Value Score of B. It also has an impressive five-year expected growth rate of 25.6%.

Global Payments: This Atlanta, GA-based company has been in the payment technology services business since 1967. Since its spin-off from its former parent company in 2001, the company has expanded in existing markets and into new markets internationally by pursuing further acquisitions and joint ventures.

GPN currently has a Zacks Rank #2 and a Value Score of A. Global Payments also has an impressive five-year historical growth rate of 14.1%.

Invesco:  Headquartered in Atlanta, GA, Invesco Ltd., formerly AMVESCAP PLC, operates as an independent investment manager. With the support of a global operating platform, Invesco distributes a broad range of investment products and services. Invesco’s investment capabilities include ETFs and Index, Fundamental Fixed Income, Fundamental Equities, Private Markets, APAC Managed, Multi-Assets/Other, Global Liquidity and QQQ.

Apart from a discounted PEG and P/E, IVZ currently has a Zacks Rank #2 and a Value Score of B. Invesco has a long-term expected growth rate of 21.9%.

Universal Health: King of Prussia, PA-based Universal Health Services Inc. owns and operates (through its subsidiaries) acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers. The company's range of services includes general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services.

UHS has a Zacks Rank #1 and a Value Score of A. Universal Health also has an impressive five-year expected growth rate of 13.6%.