5 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.

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 has been given one of the two highest ratings from CAPS members:

Data from Motley Fool CAPS as of Nov. 2.

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.

Why so blue?
For Oilsands Quest, the reason for the blues is pretty obvious. As fellow Fool Rich Duprey recently pointed out, the company's quest for profits in the oilsands hasn't exactly worked out and so it led to a quest to sell the company. That didn't work out either, so there was a new quest to sell individual assets. That quest seems to have been stymied as well and so the company resorted to issuing millions of new shares to put some cash back in the bank account. Investors seemed none too pleased with the new share issuance, though, to be fair, many of them are probably disappointed with pretty much everything going on there.

RAIT Financial's recent slide has been at the hands of a worse-than-expected earnings report. This commercial real estate REIT has been struggling under the weight of a sickly portfolio and non-operating gains masked a continued operating loss in the third quarter.

It's been a rocky ride for Suntech Power as industry analysts continue to try to figure out what's going to happen in this burgeoning industry. Early in the month, Suntech, along with SunPower (Nasdaq: SPWRA), was on the wrong side of a downgrade from Canaccord Genuity, which pegged the stock a "sell." Closely on the heels of that downgrade, a Collins Stewart analyst saw fit to bump both Suntech and JinkoSolar to "buy."

Apparently, picking winners in solar is about as easy as coming up with preseason college football rankings. But in the end, it was the bears that won out, and Suntech rode the down elevator with many other solar names.

Sinovac shareholders didn't have to wait for an earnings announcement to be walloped by disappointment. Earlier this month, the company told investors that 2010 revenue would be $40 million to $45 million versus a prior expectation of $60 million to $67 million as demand for vaccines in China continued to be weak. After a change like that, investors probably wanted to vaccinate themselves against Sinovac's stock.

Finally, there wasn't any single clear driver of Berkshire Hathaway's decline. However, I have a sneaking suspicion that the hire of Todd Combs to help manage the Berkshire investment portfolio reminded investors of Warren Buffett's mortality. And considering that Berkshire Hathaway is synonymous with Warren Buffett, it's no wonder why that would be a depressing thought.

Picking a winner
Though the CAPS community has a high opinion on all of these stocks, that doesn't mean I have to agree. Oilsands Quest is an utter mess with -- at least as far as I can see -- pretty bleak financial prospects. I'm down for the occasional turnaround story, but I prefer companies where there was a business there to begin with. Meanwhile, RAIT is a REIT without dividends, which, as far as I'm concerned, is like a day without sunshine. I'll stay on the sidelines there until it can show that the train is back on the rails.

As the conflicting analyst opinions noted above suggest, it's a heck of a puzzle to try and figure out the solar investing landscape. In any emerging industry there ends up being a lot of innovation, change, and consolidation. Will Suntech be part of the leadership in those changes? Or will others take the reins and leave Suntech languishing in the gutter? I don't know so I'm steering clear. And as for Sinovac, I know China is supposed to be the land of milk and honey for investors, but I've had a heck of a time getting comfortable with most Chinese companies that I've researched (note: I think our Global Gains team has a good solution to this -- they actually visit the companies in China).

So what does that leave us with? That's right, boring old Berkshire Hathaway. Perhaps I'm a bit biased because I own Berkshire shares myself, but the company has delivered year, after year, after year, and the current valuation is pretty reasonable.

As for concerns over Buffett and his eventual appointment with the Grim Reaper, it will almost surely hammer the stock. However, that could actually present one of the best opportunities to add to (or create) a Berkshire position. Buffett is a one-of-a-kind and he won't be fully replaced. However, Berkshire today is a giant collection of great businesses that all run themselves -- in other words, Buffett has created a self-sustaining machine.

I've given Berkshire 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 170,000-plus members currently part of the community.