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, Sprint Nextel (NYSE:S) had its stock spanked for more than a 14% loss in a day last week after reporting second-quarter financials, as well as plans to dilute the current share base with 3 million new ones.                                     

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 115,000 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 25% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than 3.

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


CAPS Rating
(out of 5)

Price Change




Goldcorp (NYSE:GG)



Petrohawk Energy (NYSE:HK)



W&T Offshore (NYSE:WTI)



North American Palladium (AMEX:PAL)



Source: Motley Fool CAPS. Price return from Jul. 18 through Aug. 11.

Investors have been wondering how low shares of Crocs can go; they are a long way from their highs of last year, when licenses were being signed by the likes of Disney (NYSE:DIS). A couple of weeks ago, the company made a massive cut from its second-quarter earnings guidance, blaming weak U.S. markets. When it came time to report, the company followed that shocker with net income of $2.1 million, far below the $48.5 million it reported last year. In CAPS, Crocs is still on two-star watch, with only 73% of the 2,377 members rating the company expecting it to beat the market.

Not long ago, gold investors were celebrating another surge in gold prices that helped kick mining stocks -- including Goldcorp -- up to new highs. But exploration and production companies have had plenty of issues to deal with lately, and Goldcorp is no exception. The company recently took a non-cash hit to the tune of $98.4 million in revaluing future tax liabilities, leading to a $9.2 million loss for the second quarter. A lowered 2008 production guidance and increased projected costs have also weighed on the company. Still, more than 93% of the 1,674 CAPS members rating Goldcorp see it outperforming the market.

Oil and gas play Petrohawk has seen its shares soar this year on the discovery of the potential locked in the Haynesville shale, but now prices are down more than 40% from their recent peak. Petrohawk has been increasing its leasehold in Haynesville, which is considered one of the hottest gas properties around, and even had some good early data from drills. But more companies are questioning the enormous estimates of gas reserves. And Petrohawk has been hurt by its hedging plan, taking a $229 million derivatives charge in the second quarter. Still, more than 95% of the 1,044 CAPS members rating Petrohawk are on board for the company to beat the S&P going forward.

W&T Offshore
Although it almost tripled its net income from a year ago, investors in offshore driller W&T were unhappy that the company delayed a large portion of its drilling wells from its 2008 program to 2009. Equipment delays, among a variety of reasons, caused W&T to drop from 50 to between 30 and 35 wells this year. But the company still holds big growth prospects with its large inventory of reserves in the Gulf of Mexico. As such, 550 of the 569 CAPS members rating W&T Offshore are bullish.

North American Palladium
Trading near 52-week lows, shares of North American Palladium continue to come under attack as the price of palladium has fallen from its surge in March to nearly $600 an ounce. North American supplies about 5% of the world’s palladium, and a good majority of CAPS members favor the company, with more than 96% of the 801 CAPS members rating it predicting that the miner will 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 5,500 stocks that 115,000-plus members have covered, in Motley Fool CAPS.

Walt Disney is one of dozens of stocks recommended to Motley Fool Stock Advisor subscribers. To see all the stocks that have helped Tom and David Gardner beat the market by 43 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 and is the author of The Qualcomm Equation. Crocs is a Motley Fool Hidden Gems Pay Dirt selection. Sprint Nextel is an Inside Value pick. The Fool's disclosure policy is made of sugar and spice and everything nice.