Are you familiar with the dynamic duo of Fama and French? No, they didn't star in Baby Mama -- that was Fey and Poehler. And they didn't sing "Ebony and Ivory" -- that was McCartney and Wonder.

While the names Eugene Fama and Kenneth French may not come up in most dinner conversations, the two have done some very interesting academic research on stocks. In short, they've proposed that there's more to stock returns than volatility -- which was most academics' previous consensus. In research they conducted over various periods and across multiple geographic locations, Fama and French determined that stocks characterized as "value stocks" have consistently outperformed non-value stocks.

Today, I've rounded up five value stocks that are all trading at less than two times their book value (you can run the same screen on the CAPS screener). To focus on high-quality stocks, I've cross-referenced these against ratings in our CAPS community of more than 125,000 investors.


Book Value


CAPS Rating
(5 stars max.)

United States Steel




NYSE Euronext




Baker Hughes




Barrick Gold








Data from CAPS, Capital IQ, a division of Standard & Poor's, and Yahoo! Finance as of Feb. 27.

Five years ago, Motley Fool Rule Breakers pick Intuitive Surgical (NASDAQ:ISRG) would have made this list with its 2.0 book value multiple. Since then, the stock has gone on a massive run, gaining more than 400% while the S&P index took a nosedive.

While we can't expect that all of these are going to perform like Intuitive Surgical, the CAPS community thinks that these are some good choices when it comes to value stocks. With that I mind, I thought I'd dig in a little further on NYSE Euronext.

Where is the value?
When it comes to listing as a public company, there just aren't too many games in town, and NYSE is the largest. Sure, it may seem strange to talk about public company listings right now, given that Mead Johnson Nutrition is the only IPO so far in 2009. But there will come a time -- believe it or not! -- when the global economy turns back around and companies once again start thinking about listing on public markets. In the meantime, NYSE continues to collect fees from traders who trade on the NYSE exchanges, as well as listing fees for companies that are already public on its exchanges.

It's no secret that NYSE faces stiff competition from NASDAQ OMX, not to mention derivatives-focused exchanges like CME Group (NYSE:CME). It's also not going to shock anyone if I say that the game is changing and changing fast. While this does pose some risk to NYSE, it's not like the company hasn't already faced the need for change -- NYSE traces its roots all the way back to 1792, and I'm pretty sure we can agree there's been plenty of change between then and now. And it certainly seems to be embracing change: Over the past few years, the company has expanded out in multiple directions, picking up Archipelago (now NYSE Arca) and the American Stock Exchange, and merging with Euronext.

But will it beat the market?
NYSE Euronext is among the top-of-the-heap five-star stocks in the CAPS community, with a whopping 2,426 outperform ratings against just 83 underperforms. CAPS members have listed a number of reasons to like the stock, including the healthy dividend, the strong brand, and the low price. Stallis became one of the NYSE bulls early last month and laid out a pretty compelling case:

Great moat, great business model, increased volatility of late probably means more transactions, good times in the future means more investor participation (equals more transactions). I shied away from the exchanges in the past because I felt it would take too long for them to grow into their multiples but it's difficult not to like NYSE Euronext at the current price...

So what do you think? Are the stocks in this group values, or value traps? Log onto CAPS and let the rest of the 125,000 member community know what you think.

More CAPS Foolishness:

Nasdaq OMX Group is a Motley Fool Inside Value pick. NYSE Euronext and Intuitive Surgical are Motley Fool Rule Breakers selections. NVIDIA is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned, though he is keeping an eye on some of them through his CAPS portfolio. The Fool's disclosure policy wouldn't know a value trap from a hole in the wall, but then again, the disclosure policy is just an inanimate collection of words.