Are you familiar with the dynamic duo of Fama and French? No, they didn't sing "Mrs. Robinson" -- that was Simon and Garfunkel. And no, they didn't perform "Who's on First" -- that was Abbott and Costello.

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 nonvalue stocks.

Today, I've rounded up five value stocks that are all trading at less than two times their book value. To focus on high-quality stocks, I've cross-referenced these against ratings in our Motley Fool CAPS community of more than 115,000 investors.  


Book Value Multiple

1-Year Change

CAPS Rating

Umpqua Holdings (NASDAQ:UMPQ)




Headwaters (NYSE:HW)




Tiens Biotech Group




Dorman Products (NASDAQ:DORM)




Palomar Medical Technologies (NASDAQ:PMTI)




Data from CAPS, Capital IQ, and Yahoo! Finance as of Aug. 15, 2008.

Five years ago, Walter Industries (NYSE:WLT) would have made this list with its 0.8 book value multiple. Since then, the stock has been on a massive bull run and is up more than 1,400% over that period.

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

Another auto angle
At this point, we've all heard plenty about the major struggles for U.S. automakers like GM (NYSE:GM), as well as the tougher times facing even the likes of Toyota (NYSE:TM). So why bother looking at companies in the auto industry at all? Well, according to CAPS All-Star sciencebzzt, "auto parts makers are where its at now." This investor is one of the 88 CAPS members who have turned their thumbs up on Dorman. sciencebzzt had this to say when rating the stock an outperformer in June:

Dorman Products is one of those companies that I love because they make all sorts of little stuff that you never think about but would be screwed without. All the little fasteners and clips and brackets and coolant lines and weird nut and bolt type parts that hold together a car, they make them. These guys have all the stuff I like too; high insider ownership, solid growth and a niche where they're important and will stay important.

Dorman sells a dizzying 92,000 auto replacement parts that are used by both do-it-yourself consumers and professional repair shops. You've no doubt seen Dorman's products if you've browsed the aisles of an AutoZone or NAPA Auto Parts, since it sells through those and other regional and national auto parts stores. And if we assume that consumers are spending less on buying new cars, we can bet that more money is being spent fixing up older cars -- a trend that would certainly be good for aftermarket parts makers like Dorman.

While Dorman's results haven't exactly been setting the world on fire, they're pretty spectacular when stacked against the shrinking revenue and multibillion-dollar losses at GM. For the second quarter, Dorman reported 5% year-over-year revenue growth. And although profits shrank from 2007, the $0.29 in earnings per share topped analysts' estimates and the stock's current trailing P/E multiple is a reasonable 13.5.

So what do you think? Are Dorman and the rest of the group values, or value traps? Log onto CAPS and let the rest of the 115,000-member community know what you think.

More CAPS Foolishness:

Headwaters is a Motley Fool Rule Breakers pick. Umpqua Holdings is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. You'll get a wide-open view of our stock picks and all we have to offer on how to make it in today's market. 

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. 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.