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 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.

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 March 18.

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 Stryker.

Why so blue?
It's hard to say exactly what's led to the decline in Stryker's stock over the past month as there's been no news out of the company other than announcing the date of its first quarter results. However, if I were to proffer a guess, I'd say that shorter term investors may have been switching from some safer stocks like Stryker with no immediate catalysts to the financial sector that's been on fire over the past month. While the S&P index has been up just less than 1% over the past month, the Financial Select Sector SPDR has jumped 18%.

What the bulls say
CAPS members are overwhelmingly positive on Stryker with over 1,100 members giving it a thumbs up versus just 32 that think it will lag the rest of the market. Why the optimism? I'll have CAPS All-Star and Stryker bull MattH42004 field that one:

When it comes to Stryker there's a lot for any investor to like. With the uncertainty in the financial markets, maybe the best thing the company has going for it is one of the strongest balance sheets in the entire health carehealth care industry. ... Stryker also has tremendous management, with almost 40% insider ownership, that has led to consistent 10% revenue growth and strong yearly cash flows. The company also has demographics on its side. An aging population is in continual need for Stryker's orthopedic products, and any form of increased government health carehealth care will only increase the demand for these products.

MattH's thoughts are just as true today as they were back in January when he originally posted them -- except, of course, that the stock is now a good bit cheaper. Though stocks like Citigroup may be down at seemingly ridiculous levels, I'm still hesitant to chase them too hard. Though Stryker may not be trading near penny stock levels, its price right now is very attractive for a solid company that isn't at risk of going nuclear.

So do you think the recent drop has created a good buying opportunity? Or will the economic slump overwhelm Stryker? Let the community know what you think -- head over to CAPS and share your thoughts with the other 130,000 members currently part of the community. Even if you'd prefer to pass on Stryker, you can check out a couple of the other stocks listed above or any of the 5,300 stocks that are rated on CAPS.

More CAPS Foolishness:

• 5 All-Star Stocks Fighting the Tide
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• 5 Top-Rated Value Stocks