For most of the past decade, value investors did far better than those who focused on growth stocks. Yet after a disastrous 2008 that saw many of its most popular stocks decimated, the question remained: Could value investing come back as a viable stock strategy?

How value died
During the early 2000s, when the economy was still reeling from the bursting of the tech bubble, value stocks showed once again why investors turn to them during tough times. Although they didn't entirely avoid losses from the bear market from 2000 to 2002, they did manage to cushion the blow somewhat. For several years, value stocks outperformed the S&P 500, while growth stocks struggled to keep up.

This time around, though, value investing didn't get the job done. Indexes of value stocks did worse than growth-stock indexes, and many popular value mutual funds suffered unexpected losses. Among the favorites of many value investors were financial stocks, whose stocks had fallen to extremely low levels. Having learned from previous crises that buying in such situations could be profitable, some fund managers made large bets on stocks like Washington Mutual and Fannie Mae -- bets that obviously didn't pan out the way they'd hoped.

The turnaround
Now, though, value has started to fight back. Even with the broader market basically flat for the year, several value fund managers have found market-beating returns.

Fund

YTD Return

2008 Return

10-Year Average Return

Yacktman Focused (YAFFX)

20.6%

(23.5%)

6.6%

Weitz Partners Value (WPVLX)

10.2%

(38.1%)

1.4%

Snow Capital Opportunity (SNOAX)

17.4%

(42.3%)

N/A

Source: Morningstar. YTD = year to date.

Each fund has found untapped riches in slightly different places. Yacktman Focused Fund, for instance, has turned a big overweighting of media-related stocks such as Liberty Media and satellite provider DISH Network (NASDAQ:DISH) into gold for investors, along with a large investment in auto financier AmeriCredit (NYSE:ACF). Weitz, on the other hand, owns a somewhat broader mix of stocks from all of the economy's sectors. Investments in retailer Cabela's (NYSE:CAB) and change-collector Coinstar (NASDAQ:CSTR) have helped deliver double-digit results so far this year.

Unlike the other two funds listed, Snow is relatively new, with just a few years under its belt. After a bad 2008, the fund has found its footing at least for now, with a 17% return coming from holdings that include financials XL Capital (NYSE:XL) and Morgan Stanley (NYSE:MS), as well as drive-maker Western Digital (NYSE:WDC).

Value is where you find it
Of course, not every value mutual fund has found this much success. Many continue to struggle under the weight of large-cap stocks that still haven't convinced shareholders that their businesses are safe from the recession.

Perhaps the most exciting opportunity for value investors right now is that the universe of promising stocks has gotten so much bigger. With stocks throughout the economy having fallen so sharply, lots of high-quality companies have been found guilty by association, simply by virtue of being in the wrong industry. 

For instance, while big national banks like Bank of America fight for survival, plenty of smaller regional banks have thus far sidestepped the worst of the problems in the financial industry -- and stand a reasonable chance of doing so entirely if the economy gets back on its feet soon.

Just as overpriced tech stocks in 1999 and 2000 became excellent value candidates in 2002 and 2003, so too have many stocks that most value investors would never have considered buying a couple of years ago fallen to levels where they show up on the value radar screen. For those who've suffered the big hit in value stocks over the past couple of years, that couldn't be better news.

For more on value investing, read about:

Want more ideas for great values in the stock market? Each month, our Motley Fool Inside Value newsletter serves up new recommendations -- and you can take a free look with a 30-day trial.

Fool contributor Dan Caplinger loves great values. He doesn't own shares of the companies discussed in this article. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy gives you great value every day.