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 its 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 sell you interests in businesses he owns or to buy 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.

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:

Stock

30-Day Return

One-Year Return

Current CAPS Rating

NVIDIA (Nasdaq: NVDA  )

(11.1%)

(73.5%)

****

Titanium Metals (NYSE: TIE  )

(13.4%)

(69.0%)

*****

Seagate Technology (NYSE: STX  )

(13.1%)

(80.0%)

****

Nasdaq OMX Group (Nasdaq: NDAQ  )

(10.3%)

(52.4%)

****

Manitowoc (NYSE: MTW  )

(19.8%)

(82.8%)

*****

American Oriental Bioengineering (NYSE: AOB  )

(22.0%)

(54.1%)

****

LECG (Nasdaq: XPRT  )

(8.7%)

(57.4%)

*****

Data from Motley Fool CAPS as of Jan. 13.

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 NVIDIA.

Why so blue?
Alex, can I take "impact of consumer spending slowdown for $404 million?"

Apparently, new PCs and geeked-out graphics chips are losing the budget battle in American households. NVIDIA, which is practically the Kleenex of graphic chip sets, has started to hit the skids, as consumers and businesses padlock their bank accounts. Earlier in the week the company stepped up to tell investors that fourth-quarter revenue would be lower than it had projected during the third-quarter conference call. The company's new estimate pegs its fourth-quarter rake at around $494 million, or roughly $404 million less than last quarter.

What the bulls say
When it comes to finding companies that are beaten but not maimed by the recession, NVIDIA may fit the bill pretty well. There's little doubt that the company is a -- if not the -- leader in its field, nor is there any question that graphics-processing power is increasingly important as the entertainment world races to make TV and games look more real than reality.

And that's not to mention the fact that NVIDIA is very well positioned to weather the economic downturn. Though it stands to see a big decline in business due to the discretionary nature of its products, it has a rock-solid balance sheet that will give it -- and investors -- a lot of comfort even as sales decline.

The stock has been a longtime favorite on CAPS, despite the seemingly endless declines in its stock price. CAPS All-Star fthfool is one of the 4,000-plus CAPS members who are bullish on NVIDIA, and recently gave the stock a thumbs-up and fired off the high points of the investment case:

Great balance sheet. Generates free cash flow. No long term debt. Closer to its 52 week low. This company will come back strong when the market turns.

So do you think the recent drop has created a good buying opportunity? Or will NVIDIA continue to suffer? Let the community know what you think -- head over to CAPS and share your thoughts with the other 125,000 members currently part of the community. Even if you'd prefer to pass on NVIDIA, you can check out a couple of the other stocks listed above or any of the 5,400 stocks that are rated on CAPS.

More CAPS Foolishness:

Beginning Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team are accepting new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

LECG is a Motley Fool Hidden Gems Pay Dirt pick. American Oriental Bioengineering is a Motley Fool Hidden Gems recommendation. Nasdaq OMX Group is an Inside Value selection. Titanium Metals and NVIDIA are Stock Advisor recommendations. The Fool owns shares of American Oriental Bioengineering and wrote puts on Nasdaq OMX Group.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt likes in CAPS by visiting his CAPS portfolio. The Fool's disclosure policy offers you one Schrute buck for reading this far.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 16, 2009, at 12:53 PM, captaintanqueray wrote:

    i've been preaching nvidia since i heard about the telsa, and now they have the tegra on the horizon. i only hope it stays low long enough for me to sell my house and dump the money into this stock :) ..only joking, but considering.. hmmm

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