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 -- contradicting 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 2 times their book value. To focus on high-quality stocks, I've cross-referenced these against ratings in our CAPS community of more than 115,000 investors.

Company

Book Value Multiple

1-Year Change

CAPS Rating

American Capital Strategies (NASDAQ:ACAS)

0.8

(52%)

****

Toyota (NYSE:TM)

1.1

(33%)

****

ConocoPhillips (NYSE:COP)

1.1

(21%)

*****

Markel (NYSE:MKL)

1.4

(27%)

*****

Verizon (NYSE:VZ)

1.8

(31%)

****

Data from CAPS, Capital IQ, a division of Standard & Poor's, and Yahoo! Finance as of Oct. 3.

Five years ago, Titanium Metals would have made this list with its 0.8 book value multiple. Since then, the stock has been on a massive bull run, rising nearly 1,000% over that period.

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

Where is the value?
Those already familiar with Markel are no doubt already very aware that the company is often compared to Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B). In fact, CAPS All-Star TMFBuck gave Markel a thumbs-up earlier in the year, saying:

A strongly disciplined underwriter of insurance coupled with an experienced investor make for a winning combination. Did I mentioned they've modeled themselves after Berkshire Hathaway? I like the culture, the leadership, the business model, and the price.

Of course, the comparison isn't perfect. While Berkshire Hathaway's main business is insurance, that company also owns a wide variety of subsidiaries ranging from Acme Brick to NetJets to See's Candies, and it generates a huge amount of its revenue from these companies. Markel, on the other hand, keeps its eyes squarely focused on its specialty property and casualty insurance.

The similarities are very notable, though. Like Berkshire Hathaway, Markel takes a very conservative view of how it prices its insurance contracts, and it uses the float that it generates from its insurance operations to invest in stocks and bonds. Perhaps most important, though, is that like Berkshire, Markel has a highly successful investor heading up its investing program. Tom Gayner, the company's chief investment officer, has created an enviable track record over the past 10 years, easily surpassing the S&P's return over that same period. Gayner has been so impressive that many have floated his name as a potential replacement for Warren Buffett at Berkshire when Buffett is no longer there.

Insurance businesses in general typically don't trade at high multiples of book value, but it's rare to see Markel's stock dip too much below a price-to-book value ratio of 2. In fact, you have to go back to 2001 to find another instance of the stock trading as low as it is today. And had you invested in Markel at the beginning of 2001, your investment would be worth almost double today -- even after the recent drop.

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

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

American Capital is a Motley Fool Income Investor selection. Markel and Berkshire Hathaway are Inside Value recommendations. Berkshire Hathaway is a Motley Fool Stock Advisor selection. The Fool owns shares of Markel and Berkshire Hathaway.

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.