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 biotech Savient Pharmaceuticals fell nearly 18% after the FDA refused to approve its latest application for its gout treatment, Krystexxa.
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 135,000 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.
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Company
|
CAPS Rating
(out of 5)
|
4-Week
Price Change
|
|
Huron Consulting Group (Nasdaq: HURN )
|
**
|
(67.5%)
|
|
Synaptics (Nasdaq: SYNA )
|
***
|
(26.7%)
|
|
China Medical Technologies (Nasdaq: CMED )
|
*****
|
(15.4%)
|
Source: Motley Fool CAPS. Price return July 10 through Aug. 4.
Huron Consulting
Similar to Accenture and Cognizant Technology, Huron helps clients run their businesses more efficiently. But it recently disclosed significant problems running its own business -- the stock lost more than two-thirds of its of its market value on Monday after announcing a bookkeeping scandal that will have it restating more than three years of results, and its 2009 revenue outlook will be slashed. Prior to the incident, Huron was geared for big growth-- and while Mahindra Satyam (NYSE: SAY ) has been able to resurrect itself from its accounting scandal, some analysts say it may be too early to determine the fate of Huron. A couple of CAPS members think the market is overreacting, but others see a damaged reputation hurting the company and prefer to invest elsewhere. At this point, though, 90% of the 258 CAPS members rating Huron remain bullish on the stock.
Synaptics
Touch-screen technology provider Synaptics posted a fivefold rise in fiscal fourth-quarter profit with sales increasing 19%, but shares dropped after the company provided a weak fiscal first-quarter and 2010 outlook with lower revenue guidance. The company has its hands in the growing smartphone and notebook market with design deals with companies like Research In Motion (Nasdaq: RIMM ) , Nokia (NYSE: NOK ) , Dell (Nasdaq: DELL ) and Lenovo. Many investors and analysts anticipated stronger revenue guidance given the pace of growth in its markets, thus their disappointment in Synaptics’ recent revenue guidance. However, the company still forecasts the strong compound annual growth rate over time that it’s experienced in recent years. In CAPS, 95% of the 693 members rating Synaptics expect it to outperform the market.
China Medical Technologies
CAPS members are highly bullish on China Medical Technologies as demand for medical services grows for China’s aging population. A recently completed internal investigation into some anonymous allegations ranging from acquisition irregularities to improper relationships with stock analysts uncovered no wrongdoing by the company, but certainly detracted from day-to-day business in recent months and will increase costs for the current and following quarter. The company is still lacking a detailed update for its financials, which it says have been delayed because of the investigation. As investors await updated financials due by the end of September, some see an opportunity to capitalize on the fear. Most CAPS members rating the company haven't wavered, as more than 97% of the 1,356 rating China Medical Technologies expect it to outperform the market.
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 5,300 stocks that 135,000-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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