3 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 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 April 26.

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, let's take a closer look at whether opportunity could be staring us in the face.

Allied Irish Banks
For U.S. investors still highly skeptical of banks like Citigroup and Bank of America (as I am), perhaps a peek at the banking situation in Ireland will make you feel better about how our big banks are doing.

While the U.S. banks are touting a significant return to profitability and have, for the most part, paid back their government loans, Allied Irish Banks is continuing to struggle. But it's not the bank's bottom line that's been worrying investors lately, it's the government's concern over Allied Irish's capital position.

Hoping to strengthen the banking system in the wake of the global financial meltdown, Irish regulators have mandated that Allied Irish raise nearly $10 billion by the end of the year. Shareholders are right to be concerned about this since part of the new capital will come from dilutive share raises. Maybe worse, if the bank can't raise the capital it needs, the government is prepared to inject capital of its own and potentially take a majority ownership stake in Allied Irish.

Goldman Sachs -- which put a "buy" rating on Allied Irish shares earlier this month -- and CAPS members are pretty positive on the bank, but I find myself less than thrilled with it.

NVIDIA
It was a thrill then a chill for NVIDIA earlier this month. Chip giant Intel (Nasdaq: INTC) provided a spark early in earnings season when it reported much better numbers than Wall Street wonks had expected. And while Intel's surprise was good for the market as a whole, it was an even bigger plus for the semiconductor industry.

But the warm fuzzies were nipped right in the bud for NVIDIA as the stock was downgraded by a Needham analyst One of the primary reasons for the downgrade was strength from AMD (NYSE: AMD). Yes, you heard that right, strength from AMD.

Now of course AMD isn't about to take over the chip world -- and its stock actually was hurt by the fact that it's still a distant also-ran to Intel -- but analysts did pick up on the major strength that AMD showed in its graphic chips during the first quarter. Back in 2006, AMD bought out ATI Technologies, a chief NVIDIA competitor, and the acquisition has made AMD a much more dangerous player in the graphic chip segment.

Tough competition is never a positive development, particularly when you're trying to regain your footing after a nasty recession. Could AMD overtake NVIDIA? Perhaps, but don't expect NVIDIA to go down without a fight. NVIDIA has been a very solid competitor in the graphic chip arena and I'm not so sure I'm ready to count it out.

Teva Pharmaceutical
There wasn't any big event that sent Teva's stock tumbling over the past month, just a few moderate hits like the dip it took after losing a patent infringement case to Pfizer (NYSE: PFE). As a manufacturer of generic drugs, Teva gets rich by copying the drugs created by big pharma players. Of course, folks like Pfizer will fight tooth and nail to keep Teva at bay -- and every so often they'll win one.

But in my eyes the dip over the past month has only made Teva's stock more attractive. The stock sells for just over 13.4 times expected 2010 earnings and analysts anticipate that growth over the next five years could be nearly 14% per year. While I do agree with fellow Fool Brian Orelli that it's a good idea to keep a close eye on the company for signs of competitive pressures, the business of generics certainly seems to be treating Teva well for now.

On CAPS, more than 1,600 members have given Teva's stock a thumbs-up, including All-Star capitalgs, whose 2006 pitch holds as true as ever today:

Between their existing drugs and those in the pipeline (both generic and name-brand), and the increasing pressure to lower health care costs, Teva is uniquely positioned to profit both long and short-term.

I've given one of these stocks a thumbs-up in my CAPS portfolio. But here's the important question: What do you think? Head over to CAPS and share your thoughts with the other 160,000-plus members.

When should you sell ? As Motley Fool co-founder Tom Gardner explains, if you've found the right company, "never" is the best answer.