I'm always looking for a good deal, whether that means buying an extra box of Cocoa Puffs 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 tells us, by way of allegory, how we can look out for these situations.

In The Intelligent Investor, Graham introduces readers to a wacky guy named Mr. Market, who pays you house calls on a daily basis, offering to sell you interests in businesses he owns or buy interests in businesses you own. Sometimes, Mr. Market will show up at your door very excited, offering you premium prices for your holdings. At other times, he'll be inconsolably depressed about the future, offering 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 four or five-star rating (the highest) by our community of investors just 30 days ago:


30-Day Return

One-Year Return

Current CAPS Rating

SXC Health Solutions (Nasdaq: SXCI)




Veolia Environment




Aluminum Corp of China (NYSE: ACH)




Valero (NYSE: VLO)




Vimpel Communications (NYSE: VIP)




TXCO Resources




Nokia (NYSE: NOK)




Data from Motley Fool CAPS and Yahoo! Finance as of March 25.

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 further research. I'll even get you started with some thoughts on Hidden Gems Pay Dirt recommendation SXC Health Solutions.

Why so blue?
SXC's slide started at the end of February, when it announced the acquisition of National Medical Health Card Systems, a pharmacy benefits management (PBM) provider. The deal seems like a good fit, and SXC's CEO said that NMHC's PBM business will complement SXC's own business, while the resulting expanded customer and relationship base will give SXC "critical mass with third-party administrators, managed Medicaid, state governments and Taft-Hartley organizations."

However, NMHC is a big bite for SXC. The market currently values SXC at $239 million, and the proposed deal for NMHC was worth $143 million at the time of the announcement. While the deal could be a game-changer for SXC, it's a big bet for a small company, and integrating the new purchase could be tricky.

SXC shares' problems were compounded earlier this month, when the company announced its fourth-quarter earnings. Earnings per share were up 20% from the prior year, topping Wall Street's expectations, but guidance didn't seem to please investors. The company projected EPS between $0.58 and $0.64 for 2008; at its midpoint, that guidance would be flat from 2007.

What the bulls say
On CAPS, 140 out of the 148 investors who've rated SXC are bullish on its shares. Many of the SXC bulls on CAPS share Irongirl1's sentiment:

With a tech advantage the established players have yet to match, and a sneaky ... Toronto Venture Exchange listing, SXCI has won several major government contracts and is going for several more. Either a more established player will buy them out, or SXCI will continue to undercut the big guys on price....thereby winning more contracts and making more money.

The big question, though, is whether the company will remain as attractive once it swallows NMHC. However complementary the new business, it's a transformative acquisition, not a simple snap-on operation. Over the coming year or so, we should get a pretty good picture of what the combined business will look like. Many investors seem to have abandoned the company recently, but if management can pull off the buyout, there's a lot of money to be made in the PBM space. Just ask MedcoHealth (NYSE: MHS) or Express Scripts (Nasdaq: ESRX).

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 over to CAPS and share your thoughts with the 93,000-plus players in our community, absolutely free. Even if you'd prefer to pass on SXC, you can check out a couple of the other stocks listed above, or any of the 5,500 stocks rated under CAPS' umbrella.

More CAPS Foolishness:

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. SXC Health Solutions is a Hidden Gems Pay Dirt recommendation. You can check out Matt's CAPS portfolio here, or tune into his CAPS blog here. The Fool's disclosure policy knows how to drop a stock like it's hot, but only when the company is truly cold.