7 Highly Rated Stocks on Sale

I am always looking for a good deal, whether that means buying an extra box of Golden Grahams when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than it's worth may seem silly, but legendary value investor Ben Graham (no relation to the cereal) tells us, by way of allegory, how we can look out for these situations.

In The Intelligent Investor, Graham introduces readers to a wacky chap named Mr. Market. Mr. Market's game is to pay you house calls on a daily basis to offer to sell you interests in businesses he owns or to buy from you interests in businesses you own. Sometimes Mr. Market will show up at your door very excited and offer you premium prices for your holdings, while at other times he'll be inconsolably depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.

To find stocks that Mr. Market is depressed about, I've turned once again to The Motley Fool's CAPS investor community. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:

Data from Motley Fool CAPS as of Jan. 12.

As the table shows, these stocks are all still very well-regarded by the CAPS community despite their underperformance over the past month. While these are not formal recommendations, they could be a great place to kick off further research. I'll even get you started with some thoughts on Motley Fool Income Investor favorite Sysco.

Why so blue?
With the rest of the market up slightly over the past month, we can't blame Sysco's drop on general market malaise. We can't really blame it on earnings either, since the company's third-quarter report came out back in November. Dividend distress isn't at fault either. In fact, the most recent dividend action at Sysco was an increase in the stock's payout.

So what is it then?

I'll put my money on boredom. Let's face it, Sysco is a boring food service company and a boring stock. The company chugs along, improving margins bit by bit, churning out gobs of cash, and all the while paying investors a nice dividend.

Where's the sex appeal? Where's the excitement? There's no way that Sysco's stock is going to double in a year, and who wants to try bragging at a cocktail party about owning a food distributor? With the market in full-on rally mode, Sysco may just be too sleepy to attract investors right now.

What the bulls say
In my book, boring is one of the best compliments you can pay to a company. That is, of course, if that boring business is a high-quality, cash-generating machine like Sysco. Nobody's going to get rich quickly off of this lumbering giant, but it's an undisputed industry leader that should continue to reward investors for years to come.

And it's not like Sysco hasn't proven its mettle. Over the past decade Sysco's stock (adjusted for dividends) was up 69% despite the fact that the S&P 500 fell 21% over the same timeframe.

But I'm not the only one enamored of Sysco. More than 1,000 CAPS members have given the stock a thumbs-up, against just 34 who think it will lag the market. CAPS All-Star aitraders became a bull back in September and had this to say:

one of the only stocks not moving as the market rallies. So the market believes more in housing than it does in restaurants? They have $1 b in cash, $1 b in free cash flow/year, paid a dividend for 38 years, and by many reports continue to gain market share and set it sights on acquisitions in this trying market. A payout ratio of 52% and a yield of 3.7%, the dividend looks to be very safe for many years. They also have an extremely successful network of distribution centers making them a large moat, dominant company in their field. ...

But here's the important question: Do you think the recent drop has created a good buying opportunity? Or will Sysco's stock continue to struggle? Head over to CAPS and share your thoughts with the other 145,000 members of the community. Even if you'd prefer to pass on Sysco, you can check out a couple of the other stocks listed above or any of the 5,300 stocks that are rated on CAPS.

The best thing that you can do for your portfolio in 2010? Work on your patience.