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 AIG
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 25% 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.
Company |
CAPS Rating
|
4-Week |
---|---|---|
Alcatel-Lucent |
** |
(26.1%) |
Force Protection |
*** |
(43.1%) |
Cliffs Natural Resources |
**** |
(26.2%) |
Source: Motley Fool CAPS. Price return June 12 through July 7.
Alcatel-Lucent
Alcatel-Lucent recently signed a worldwide alliance with Hewlett-Packard
Force Protection
Force Protection's shares recently took a hit when its Force Dynamics venture with partner General Dynamics, and other bidders like Navistar
Cliffs Natural Resources
Wall Street analysts recently cut earnings estimates for the next reported fiscal year for Cliffs Natural Resource, taking into account the iron ore miner's scaling back of production. While Rio Tinto has been selling iron ore in record amounts, Cliffs Natural Resources has recently deferred about 1 million tons of customer purchase obligations until the first quarter of 2010 due to weak demand from steelmakers. In April, the company said its iron ore mines were operating at about half of their annual capacity, and that its North American iron ore business is expected to produce about 15 million tons this year at higher costs compared to last year's output of 35.2 million tons. Though the near term offers little excitement for investors, nearly 97% of 1,083 CAPS members rating Cliffs Natural Resources remain bullish.
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.