When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The following equities suffered dramatic drops over the past week. With help from the 170,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back:

Company

How Far From 52-Week High

Recent Price

CAPS Rating
(out of 5)

Telefonica (NYSE: TEF)(12%)$23.12****
Lumber Liquidators (NYSE: LL)(36%)$18.60****
Oncothyreon (Nasdaq: ONTY)(11%0$8.54**
Rare Element Resources (NYSE: REE)(42%)$10.45*
Molycorp (NYSE: MCP)(29%)$56.55*

Companies are selected by screening on finviz.com for abrupt 5% or greater price drops over the past week. 52-week high and recent price data provided by finviz.com. CAPS ratings from Motley Fool CAPS as of July 10.

Five super falls -- one superball
There are no two ways about it. If you owned any of the five stocks named above last week, you're significantly poorer for it today. So what went wrong?

The answer isn't always clear. Cancer researcher Oncothyreon, for example, suffered no bad news last week. My best guess here is that all we saw last week was investors cashing in on the stock's recent run-up.

Meanwhile, the reason for the declines at this week's two lowest-rated stocks is obvious: Rare-earth stocks Rare Element and Molycorp suffered a double news whammy last week. First, Japan announced the discovery of a mother lode of rare-earth deposits on the ocean floor near Hawaii (suggesting that China's lock on the resource may not be quite as vise-like as previously thought). Then, the WTO ruled against Chinese restrictions on exports of nine key raw materials, including zinc and bauxite. Because Chinese export quotas on these materials resemble restrictions it imposes on exports of rare-earths metals, the fear is that China will soon be forced to open the floodgates here as well, eliminating the supply bottleneck that has been supporting the sky-high valuations at Rare Element and Molycorp.

As bad as that news sounds, these companies' declines pale in comparison to the 30% market cap implosion that struck Lumber Liquidators last week. The company ratcheted back sales guidance and warned that its profits for the current quarter will come in nearly 39% lower than Wall Street had been expecting. Cue sell-off.

I suppose you expect me to tell you that out of these five stocks, Lumber Liquidators is the one you want to own today. It isn't. Lumber Liquidators may be a Motley Fool Hidden Gems selection, and a Motley Fool Rule Breakers recommendation to boot -- but with weak sales and no free cash flow to its credit, the company is not one I want to own. In contrast, the stock I think offers the most potential for profit this week just might become my next buy.

The bull case for Telefonica
Over in Europe, regulators are cracking down on roaming charges imposed by telecoms like Spain's Telefonica. As the stock's 7% slide last week suggests, this has some investors feeling nervous about future profits -- but not all investors.

CAPS member Dzerzhinsky points out that Telefonica doesn't operate only in Spain. It also has a "great business in South America." But it has been "unfairly tarred with apprehension over financial difficulties in its home country."

CAPS member iamvoltron agrees: " … too many people think of [Telefonica] as a Spanish company. Lots of growth and market share outside of Spain (South America...). People wrongly put this in the Eurozone basket."

And that's just one of its pluses. In addition to highlighting the company's growth prospects in Brazil, which boasts "a large market with a growing middle class, an opportunity for rapid growth for cell phone services," CAPS member ip3500 likes Telefonica for its "large dividend."

All together now: "How large is it?"
I'm glad you asked, although you may not believe the answer. According to the Fool's data provider, Capital IQ, Telefonica shares are currently paying a 10.9% dividend yield. That's even more impressive than the 9.1% yield quoted on Yahoo! Finance. (And not uncommon. Data providers often differ on questions of international stocks' dividend rates.) One thing is certain: You'll collect a lot more dividend money by owning Telefonica than you will by owning shares of American analogs like AT&T (NYSE: T) or Verizon (NYSE: VZ) -- paying 5.5% and 5.2%, respectively.

Even better, it will cost you less to secure Telefonica's generous yield than it would cost you to take a stake in either AT&T or Verizon. Compared to those firms' double-digit P/E ratios, Telefonica is a relative bargain at just 7.2 times earnings.

Foolish final thought
That said, you all know the saying about there being no such thing as a free lunch, right? It's true in Telefonica's case as well. Buying this cheap stock, and securing its rich dividend, requires you to accept the risk that earnings will decline going forward. On average, analysts expect to see Telefonica's net profits shrink 4% per year over the next five years.

But it remains to be seen how much of that decline will actually materialize. With more than 40% of its revenues coming from the fast-growing Latin American market, I'm personally not convinced the damage will be as bad as feared. But that's just my opinion. What we'd really like to know is how you feel about Telefonica's prospects.

Click over to Motley Fool CAPS now and tell us what you think about Telefonica.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 574 out of more than 170,000 members. The Fool has a disclosure policy.

The Motley Fool owns shares of Telefonica and Lumber Liquidators. Motley Fool newsletter services have recommended buying shares of AT&T and Lumber Liquidators.

Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.