5 Stocks in a Tailspin

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, IndyMac Bancorp capped off a long downtrend with another 59% drop on Monday after it was seized by the Federal Deposit Insurance Corp. (FDIC).

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks after a long run-up. 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 110,000 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 30% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than three.

Here's a sample of stocks our CAPS screen returned:


CAPS Rating
(out of 5)

Price Change

Las Vegas Sands (NYSE: LVS  )



Advanced Micro Devices (NYSE: AMD  )



VMware (NYSE: VMW  )



Legg Mason (NYSE: LM  )



Zumiez (Nasdaq: ZUMZ  )



Source: Motley Fool CAPS. Price change is between June 20 and July 15.

Las Vegas Sands
Gambling revenue on the Las Vegas Strip fell 16.4% in May as more cash-strapped gamblers opt to pay bills rather than spin the wheel. To keep occupancy rates up and fend off competition, Las Vegas Sands (LVS) and other gambling powerhouses, like Wynn Resorts, are slashing Vegas room prices. Even as LVS invests heavily to grab a share of booming Asian gaming revenue in Macau, China, many investors see more pain for casino operators. As such, 163 of the 887 CAPS members who have rated LVS are bearish on its future.

Advanced Micro Devices
Longtime rival to processor king Intel (Nasdaq: INTC  ) , AMD has been taking a few on the chin recently as DreamWorks Animation recently scrapped its AMD powered systems in favor of Intel-powered Hewlett-Packard machines. While the loss of one customer is a drop in the bucket, that bucket is full of more than $4 billion in losses racked up in the last six quarters. Some investors are patiently waiting for profits, but only 80% of the 2,913 CAPS members rating AMD expect it to outperform the market.

When VMware announced last Tuesday that 2008 revenue would be lower than forecast -- and that it was replacing CEO and founder Diane Greene -- investors weren't kind. While many investors reacted sharply to the blunt shift at the top, all is not gloom and doom, as former Microsoft (Nasdaq: MSFT  ) executive Paul Maritz is stepping in to take the reins. A premium valuation of VMware -- to the tune of 63 times current earnings -- keeps a few skeptics on the rolls. Still, 90% of the 1,401 CAPS members rating VMware see it outperforming the broader market in the future.

Legg Mason
Legg Mason jarred investors when it reported its first quarterly loss in its 25-year history in May and its share price has continued to fall. Some investors see the high-quality asset manager as the next big bargain though, and have been buying Motley Fool Inside Value recommendation Legg Mason as shares have been falling. CAPS members in general remain cautious, as 64 of the 845 members rating the company still see it underperforming the S&P going forward.

Like many other retailers, clothing and apparel retailer Zumiez is struggling with decreased consumer spending. But the stock really fell flat when the company reported a 3.4% drop in same-store sales. Still, a five-year growth estimate of 22% leaves the majority of CAPS members believing there's great potential in small-cap Zumiez -- 95% of the 900 CAPS members rating the company expect it to outperform the market.

Ultimately, whether 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 5,500 stocks that the 110,000-plus-member community has covered in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.

VMware is one of dozens of stocks selected by the Motley Fool Rule Breakers service to beat the market over the long haul. To see all the stocks David Gardner and the analyst team have recommended, take a free 30-day trial today.

Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He owns shares of Intel and is the author of The Qualcomm Equation. DreamWorks Animation is a Stock Advisor pick. Zumiez is a Motley Fool Hidden Gems selection. Microsoft, Legg Mason, and Intel are Inside Value selections. The Fool owns shares of Legg Mason. The Fool's disclosure policy is made of sugar and spice and everything nice.

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10/21/2016 4:00 PM
AMD $6.52 Down -0.44 -6.32%
Advanced Micro Dev… CAPS Rating: **
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