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 in airlines such as US Airways and Continental and cruise-ship operators such as Carnival all dropped by double-digit percentages on Monday, amid fears of reduced travel in light of the swine flu outbreak.
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 130,000 CAPS members to make better decisions.
We'll use CAPS' handy stock-screening tool to quickly zero in on companies that have been slashed by at least 15% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than 3. If you want to run this screen for yourself, please do -- just keep in mind that the results will update with the market.
|
Company
|
CAPS Rating
(out of 5)
|
4-Week
Price Change
|
|
Burger King Holdings (NYSE: BKC )
|
**
|
(28.5%)
|
|
Intuit (Nasdaq: INTU )
|
***
|
(16.7%)
|
|
MEMC Electronic Materials (NYSE: WFR )
|
****
|
(21.3%)
|
Source: Motley Fool CAPS. Price return April 3 through April 28, 2009.
Burger King
While McDonald's (NYSE: MCD ) continues to defy the recession and Chipotle (NYSE: CMG ) pulled off a strong quarter, Burger King's first-quarter revenue was basically flat, rising 1% to $600 million. Though comps held up well early in the year, it had a big drop in same-store-sales in March, particularly in Germany and Mexico -- even before the swine flu outbreak. It's now had to close dining rooms in all 118 of its Mexico City-area outlets, which has understandably gutted sales there, forcing the company to cut its full-year outlook, and souring investors. Many CAPS members expect other fast-food chains to hold up better in the current economy; only 75% of the 437 members rating Burger King have confidence that its shares will outperform the market.
Intuit
Much like H&R Block, tax-prep and financial-software maker Intuit has a lot riding on the current quarter, as a lot of the year's revenue comes during tax season. Although more people are avoiding tax preparers and doing their own taxes -- pushing Intuit's TurboTax federal software usage 11% higher year over year -- the company's Consumer Tax segment didn't end the season as well as anticipated. Management expects the segment's full-year revenue to be less than its previous guidance range.
The company expects its small-business software such as QuickBooks to be a key revenue driver after tax season; it's been offering free trials on some software to spur demand. Intuit hopes to bring in cash-strapped users and convert them into paying customers down the line. Many investors think this is a good strategy, and more than 92% of the 437 CAPS members rating Intuit believe the company has what it takes to beat the market.
MEMC
Lack of financing and lower demand has hit the solar industry. SunPower (Nasdaq: SPWRA ) and semiconductor maker MEMC recently posted falling revenue in their recent quarters. The current economic environment led rival First Solar (Nasdaq: FSLR ) to extend payment terms to customers, and both MEMC and SunPower expect solar-panel and polysilicon prices to continue to slide. MEMC has taken steps to rein in costs by reducing staff, saving about $30 million a year.
But the company has also seen some signs of increasing demand in the current quarter. Many CAPS members like MEMC's fundamentals and expect it to emerge strongly from the downturn. Today, nearly 97% of the 1,846 CAPS members rating MEMC believe it will outperform the S&P.
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 nearly 5,300 stocks that 130,000-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.
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