The correct answer is      (E.)  Microsoft

That's right, Microsoft (Nasdaq: MSFT) has returned nearly +4,000% over the last 17 years, even though standard valuation techniques said to stay away from the software giant.

Microsoft is not an isolated incident either. Video game retailer GameStop (NYSE: GME) has changed hands at an average P/E of 31 over the past five years -- pricey in the eyes of many, but it has delivered sizzling gains of +1,130%. Performance like this isn't typical of course, but there is at least one common denominator between these two exceptional companies that will help investors understand this interesting value investing conundrum. The answer lies in the firm's fair value. In both examples, the firms' fair value exploded alongside their share price -- meaning even as the prices rose, their intrinsic worth did as well.

Spotting the next Microsoft is no easy task. The challenge is how to determine whether a stock has the fundamentals in place to support its rising share price or if the increase is a result of "momentum" investing -- in which investors simply chase returns and pile onto winners, a dangerous game. After all, those who blindly pay $40 for a stock today just because it was worth $30 yesterday might not be fortunate enough to find someone else willing to pay $50 for it tomorrow. Just ask someone who paid more than $900 (split-adjusted) for Ariba (Nasdaq: ARBA) back in 2000, or $800 for JDS Uniphase (Nasdaq: JDSU), or $3,000 for Internet Capital Group (Nasdaq: ICGE).

For a time, these all seemed to be can't-miss propositions, but ultimately none had the cash flows to back up their valuations -- and all three came crashing back to Earth, surrendering more than 99% of their market capitalization.

Prudent investors look to avoid this by looking past the basic financial ratios available to everyone with an Internet connection and drilling deep into the core fundamentals of the business itself to find its actual true worth. It takes time to find these rare gems, but that's what Half-Priced Stocks editor Nathan Slaughter and his team at StreetAuthority did. In the process they discovered a future telecom giant with a trailing one-year return of +40% and the potential to go another +30% until reaching its true worth. And this company is just one of seven big gainers listed in this month's issue that have the fundamentals to keep driving their impressive returns. To learn the names of these stocks, and to learn more about the Half-Priced Stocks newsletter, please visit this link.