7 Highly Rated Stocks on Sale

I am always looking for a good deal, whether that means buying an extra box of Cocoa Puffs when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than its worth may seem silly, but legendary value investor Ben Graham tells us, by way of allegory, how we can look out for these situations.

In The Intelligent Investor, Graham introduces readers to a crazy guy 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 totally depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.

So to find some of the 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:

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 some further research. I'll even get you started with some thoughts on FormFactor.

Lagging the chip sector
Some of the biggest names in chips, such as Intel, Texas Instruments, and Maxim, have been showing some life over the past few months. Even AMD, which is punch-drunk after dropping more than 40% from a year ago, has been kicking up a little dust recently. Meanwhile, Motley Fool Hidden Gems pick and highly rated CAPS stock FormFactor has been moving in the opposite direction.

The manufacturing process for semiconductor chips is exceedingly precise, and chip production requires multiple tests throughout the process. FormFactor provides wafer probe cards, which are used to test semiconductor wafers in the front end of the manufacturing process. The company uses its own MicroSpring interconnect technology for designing the points where the test probe comes in contact with the wafer it's testing. This technology has put FormFactor in the limelight because it allows for faster testing of the wafers with less damage than other technologies.

CAPS All-Star smith972 recently gave FormFactor the thumbs-up, calling its wafer probe technology "cutting edge." Another CAPS player, DangerMoguls, thinks that FormFactor is a good way to way to play the DDR2 (a newer, fancier type of memory chip) upgrade cycle. Back in February, he shared:

I visited another probe card company (private) and general[ly] like the business. It's not an easy business to enter and you can grab control of a market (like [FormFactor] has done with DDR2). What struck me was that the management of this private probe card company could only say great things about [FormFactor]. That made me notice.

So do you think FormFactor's stock will turn back around? Or are the 363 bulls on CAPS wrong? Let the community know what you think -- head over to CAPS and share your thoughts with the other 60,000-plus players currently part of the community. Even if you'd prefer to pass on FormFactor, you can check out a couple of the other stocks listed above -- or any of the 4,700 rated stocks.

More CAPS Foolishness:

• 3 All-Star Stocks on Fire
• Your Stock Just Got Tagged
• 3 Kings of Cash

RC2 is a Hidden Gems newsletter recommendation. Intel is an Inside Value selection. You can check out any of the Fool's newsletters with a 30-day free trial.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out Matt's CAPS portfolio here, or tune in to his CAPS blog here. The Fool's disclosure policy suggests that you ignore any phone calls from brokers at J.T. Marlin.