7 Highly Rated Stocks on Sale

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

In The Intelligent Investor, Graham introduces readers to a wacky 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. 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.

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:

Data from Motley Fool CAPS as of June 10.

As the table shows, these stocks are still well-regarded by the CAPS community, despite their underperformance over the past month. Understand -- these are not formal recommendations, but they could be great places to kick off further research. I'll get you started with some thoughts on VCA Antech.

Why so blue?
Sometimes stocks don't need a reason to decline. That's right; despite the inevitable Yahoo! Finance message board posts saying, "Somebody knows something," stocks do end up falling without help from any dour news. Maybe it's the broader market, maybe it's investors taking profits, or maybe it's just selling sparking more selling -- who knows.

That's recently been the case for the stock of animal health-care specialist VCA Antech. The company -- which operates veterinary diagnostic laboratories and animal hospitals and sells medical equipment -- gave a positive earnings report in late April.

Revenue and earnings were up 16% and 10%, respectively, and earnings topped the bar set by Wall Street. And though the stock got a badly needed shot in the arm from the report, it has since given back most of the gains.

What the bulls say
At around 19 times estimated 2008 earnings, VCA isn't a cheap stock, despite the fact that it's fallen 36% from its previous highs. The underlying business, on the other hand, is particularly attractive, as it serves a large and growing market and still has a good deal of room to grow.

And for those who still have recession at the forefront of their brains, VCA is pretty well-fortified. Denying Fido proper medical care is likely low on the list for most families' budget cuts.

That latter point, and shifting demographics in the U.S., led CAPS player jackasper to give VCA a thumbs-up in April:

I believe this is as recession proof as a stock gets -- people are going to take the pets to the vet period -- even if they have to cut corners in other areas to do so. After all, Fluffy is part of the family. I also see this as a great growth stock. As the population ages, there will be more and more pets purchased as companions for the elderly -- and they will need veterinary services as well. Just don't think you can go wrong with this stock over the long haul.

Do you think the recent drop has created a good buying opportunity? Or is there more downside ahead? Let the community know what you think. Head to CAPS and share your thoughts with the 105,000-plus members of the community. Even if you'd prefer to pass on VCA Antech, you can find out about the other stocks listed above, or any of the 5,700 stocks that are rated on CAPS.

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