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, when Moody’s cut Ambac Financial’s credit rating to junk status last Wednesday, shares plunged 41% in a single day.

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 120,000 CAPS members to make better decisions.

We've used 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 3.

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


CAPS Rating
(out of 5)

Price Change

General Motors (NYSE:GM)



Hartford Financial Services (NYSE:HIG)



Goodyear (NYSE:GT)



The Blackstone Group (NYSE:BX)



Royal Caribbean Cruises (NYSE:RCL)



Source: Motley Fool CAPS. Price return from Oct. 17 through Nov. 10.

General Motors
Both GM and Ford posted quarterly losses last week, bleeding billions from their dwindling cash. High expenses have many fearing that the company will run out of cash by early next year without some injection of capital. GM executives have frequently spoken out against filing for bankruptcy; instead, they have joined Ford and Chrysler in the continued push for a government bailout that many consider a really bad idea. Just ask Japan.

At this point, nearly 57% of the 4,448 CAPS members rating GM expect it to underperform the market.

Hartford Financial
AIG peer Hartford Financial is also in the insurance and financial services business and has its share of bad debt on the books. But the company is seen by many as better capitalized than AIG and others, and hasn't had to double-dip in the government kitty yet.

Hartford has been taking significant steps to control the damage from its reported third-quarter loss of $2.6 billion. This includes cutting 500 jobs and raising $2.5 billion cash in recent months to boost capital. While more actions may be needed to keep the company going, nearly 79% of the 413 CAPS members rating Hartford Financial expect it to outperform the market.

The troubled auto sales in the U.S. have also hurt tire maker Goodyear, as shares have fallen to a fraction of their $36 highs last year. The tire maker reported that the number of tires sold dropped by 12.4% in the third quarter, but it did make more money per tire, bringing revenue up slightly to $5.2 billion. Many investors see the demand for tires continuing, and its cheap shares are one reason 81% of the 357 CAPS members rating Goodyear expect it to outperform the market.

Blackstone's sobering position today is a far cry from its heady IPO days last June -- shares have plunged 80% since then, and its recent third-quarter earnings report showed GAAP losses of $340 million. Even though Blackstone's CEO sees great opportunities in the current market, a report issued by Barron’s questions the value of assets on the company’s balance sheet and sees them as inflated. Still, 80% of the 913 CAPS members rating Blackstone have sided with the company and expect it to outperform the market.

Royal Caribbean
Cruises certainly don't fall in line with those stable, non-cyclical sectors like toilet paper, but Royal Caribbean has raised 2008 full-year guidance even though lower bookings have the company anticipating a weaker fourth quarter. Recent drops in fuel prices will play a big part in relieving costs at cruise lines and airlines like Southwest Airlines (NYSE:LUV). But with peer Carnival (NYSE:CCL) recently warning that it would suspend its dividend, some investors wonder if they can count on the $0.15 quarterly payout from Royal Caribbean much longer. Still, 85% of the 360 CAPS members rating Royal Caribbean 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 nearly 5,400 stocks that 120,000-plus members have covered in Motley Fool CAPS.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 26 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. Royal Caribbean Cruises is a Stock Advisor pick. The Fool's disclosure policy is made of sugar and spice and everything nice.