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 5.

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.

China Fire & Security
While the first-quarter earnings rush will begin next week when aluminum giant Alcoa reports, China Fire's stock is still reeling from the disappointing fourth-quarter earnings it reported last month.

For the fourth quarter, China Fire reported earnings of $0.10 per share. Not only was this less than half of what the company reported for the fourth quarter of 2008, it was also below what analysts were expecting. Management chalked the shortfall up to a delay in signing the contract for the massive Wuhan Iron and Steel retrofitting project.

So should CAPS members rethink their five-star stance on China Fire? I'm not so sure. The company relies in large part on big sales of full fire protection solutions to industrial customers, so it's hard to expect that growth is going to come in a perfectly smooth fashion.

In fact, if this really was just an uncharacteristically soft quarter and the company has a good handle on earnings for 2010, the getting could be good right now with the company's 2010 price-to-earnings ratio below eight.

Accuray
If you're like me, Intuitive Surgical (Nasdaq: ISRG) is the first name that jumps to mind when it comes to robots helping save lives in hospitals. But CAPS members seem to think that Accuray should be on investors' radars when it comes to robotic medicine.

Accuray has developed a robotic radiosurgery system called the CyberKnife, which uses image-guidance technology and a compact linear accelerator to blast cancerous tumors with targeted radiation.

Pretty cool, right? Well apparently Varian Medical (NYSE: VAR) thought the same thing and late last year it received FDA clearance for its own radiation therapy system, the Trilogy Mx. An analyst at Soleil Securities thinks that the Trilogy Mx could be out within the next month and could provide some very stiff competition to the CyberKnife. As a result, he downgraded Accuray's stock to "sell."

As if that's not enough, Varian has a secret weapon in this battle: Accuray founder John Adler, who joined Varian as chief of new clinical applications just this month.

Combine all of this with Accuray's spotty history of profitability, and I'm not so sure I'm on board with CAPS members' optimism on this stock.

Neutral Tandem
Similar to Accuray, competition has been the recent concern for Neutral Tandem investors.

Neutral Tandem helps phone carriers such as AT&T (NYSE: T) and Sprint Nextel (NYSE: S) connect calls between their separate networks. The company currently has a patent in place around its core business of operating a managed tandem network. However, the U.S. Patent and Trademark Office recently agreed to re-examine the patent at the request of competitor Peerless Network.

While keeping competition at bay is always a primary concern, CAPS members don't seem too worried about the patent issue. CAPS All-Star Lituus gave the stock a thumbs-up shortly after the patent ruling, suggesting that "the patent was not a core strategic asset of the company" and calling Neutral Tandem's stock "a growth stock at a value price."

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.

Don't think these stocks are big enough opportunities? Fool Austin Edwards thinks he's got your shot to score big.