I found this idea this morning on Saylor's Log. I thought these sheep would be a great literature response to the Sheep in a Jeep books.
You could do this as a whole group if you think your little ones are not ready to do it on their own. Make a giant version of the sheep together. Then brainstorm rhyming words as a whole group or have students pair up and think of words to share.
I found this idea from Just Mommies. I know these do not look like sheep, but it would not be hard to make them into ones.