Individual stocks can surge 10%, 25%, or even higher in a short period of time. And they can fall just as far, just as fast. Witness the 17% haircut that robotic surgical-tool developer Intuitive Surgical (Nasdaq: ISRG) got late last week, when great growth in the first quarter didn't measure up to its high valuation.

Big drops in share price can signal material defects or new risk in a company, but at other times, they're simply pullbacks after a long run-up. Fortunately, we have the resources of the Motley Fool CAPS community 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 investors' opinions count more in shaping each company's rating than the picks of their poorer-performing peers. This allows investors to intelligently use the collective wisdom of more than 97,000 CAPS investors to make better investing decisions.

To put this into practice, we'll screen for stocks that have been slashed by at least 20% in the past month, and that have a market cap of greater than $100 million and a beta of less than 3. That'll keep us out of the mud-filled world of gyrating penny stocks.

Here's a sample of stocks our screen returned.


CAPS Rating
(out of 5)

Price Change

MannKind (Nasdaq: MNKD)



Crocs (Nasdaq: CROX)



Affymetrix (Nasdaq: AFFX)



Centerplate (NYSE: CVP)



First Horizon National (NYSE: FHN)



Return data is calculated as the difference between the closing price on March 14 and the closing price on April 17, as per MSN Money's screen. Star ranking from CAPS. Data as of April 17, 2008.

Let's add a little color to recent circumstances, and find out why some of these stocks have been beaten so badly.

Stepping in gum
In the retail space, it doesn't take long to fall from grace; a mere quarter or two can take any retail king of the hill down to the lowlands. Faddish footwear maker Crocs was flying high early in 2007; it could hardly maintain supply of its stylish clogs to eager retailers. But after the summer rush, the company got tripped up, as inventory soared and the company guided below the heated pace the market was expecting.

The news this year hasn't gotten any better. The latest freefall in shares came thanks to another profit warning, this time a shocking cut in the outlook for 2008. In the face of a "challenging retail environment," the company committed to shuttering a plant in Canada and increased a stock buyback authorization by 5 million shares. But the expanded share program won't kick in until after earnings are announced in May, which gives investors more reason to believe that -- if the company is in no hurry to buy its own stock -- more bad news could be coming.

Even though stock in Crocs has fallen more than 85% since its peak less than six months ago, investors in CAPS have never bumped it above its two-star rating, and even briefly dropped it to one star. Seeing holes in the story, the question of whether Crocs shoes can break the "fad barrier" and show more staying power, like Deckers Outdoor's (Nasdaq: DECK) Ugg line, has been answered by a sizable group of Crocs bears. Indeed, about 28% of the 2,214 investors rating the company believe the stock will underperform the broader market in the future.

Biochip clipped
Another two-star stock in a tailspin, Motley Fool Rule Breakers recommendation and genetic analysis systems developer Affymetrix, has also been punished for lowered guidance for the coming year. Yet while the new outlook represented only a 3% drop in revenue -- something the company felt it could offset by cutting spending -- the market showed no mercy.

While many investors still see growth opportunities in diverse applications for the company's biochip products, the current industry trends of pharmaceutical companies cutting their research budgets is obviously weighing on their minds. Affymetrix's star rank recently dropped a notch from the three-star rating it held for most of the last six months, as nearly 20% of the 288 players weighing in on the company are bearish.

Ultimately, whether you believe the reasoning behind a fall in any stock, your own research is more important than collective opinions. Still, CAPS can 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 5,600 stocks that 97,000-plus investors 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.

Intuitive Surgical and Affymetrix are two companies that have shown enough potential to be recommended by the Motley Fool Rule Breakers service. To see which stocks have the service beating the market by nine points on average, take a free 30-day trial.

Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He owns no shares of companies mentioned here. MannKind is a Hidden Gems Pay Dirt recommendation. First Horizon National is an Income Investor recommendation. The Fool's disclosure policy is made of sugar and spice and everything nice.