Individual stocks can surge 10%, 25%, or even higher in a short period of time. And they can fall just as far, just as quickly. For example, shares of women's clothing retailer New York & Co. fell nearly 30% on Tuesday, a day after the woman's clothier said it will likely post a larger-than-expected second-quarter loss.
Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks along with the larger pessimism facing the market today. Fortunately, we have Motley Fool CAPS, a great resource to help us understand the larger picture behind big price drops.
Is the sky falling?
CAPS contains more than just the crowd's opinions. Its best-performing members' votes count more in shaping each company's rating than do the picks of their poorer-performing peers. That way, investors can intelligently use the collective wisdom of more than 165,000 CAPS members to make better decisions.
We'll use CAPS' handy stock screening tool to quickly zero in on companies with three factors: their prices have fallen at least 20% in the last four weeks, and they have market caps greater than $100 million and betas of less than 3.
Company |
CAPS Rating
|
4-Week |
---|---|---|
KB Home |
* |
(24.4%) |
Chico's FAS |
** |
(24.2%) |
Jamba |
**** |
(32.9%) |
Source: Motley Fool CAPS. Price return May 14 through June 8.
KB Home
With the homebuyer tax credits now yielding to a timely death, many investors expect a muted recovery at best for homebuilders. The credits gave a boost to Pulte Group's
Chico's
Even though profits more than doubled, the market just wasn't impressed with Chico's recent quarterly earnings report. The quarter included a 14.9% jump in same-store sales that topped the 14.1% increase reported by competitor Ann Taylor Stores
Jamba
Jamba's been making progress with its refranchising initiative, but its reduced company-owned store count has also contributed to falling first-quarter revenue, contributing to a continued decline in shares lately. It's looking to bring its comparable sales back into positive territory this year, and some CAPS members see turnaround potential in the smoothie purveyor. It's also been adding items to its menu like oatmeal and hot beverages in hopes of driving more store traffic, a move that McDonald's
Ultimately, whether or not you believe a fall in any stock is warranted, your own research is more important than collective opinions. CAPS can help you quickly focus your due diligence, and even point out potential pitfalls you may not have seen.
Add your take on these or any of the 5,400 stocks that 165,000-plus members have covered in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.