"'Don't catch a falling knife' ... The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade."

So runs the thesis of my recurring Fool column "Get Ready for the Bounce," in which we search among the wreckage of Mr. Market's overturned cutlery drawer, hoping to find future winners in a pile of 52-week losers. But do we really need to sit around for a whole year, waiting for a potential bouncer?

I say nay. Sometimes, stocks fall far in far less time than a year -- and like a superball dropped from the balcony, the harder they fall, the higher they bounce. Today, we're going to look at a few equities that've suffered dramatic drops over the past week. With a little help from the 145,000 members of Motley Fool CAPS, we hope to find an opportunity or two for you:


How Far From 52-Week High?

Recent Price

CAPS Rating
(Out of 5)

United States Natural Gas  (NYSE:UNG)




Take-Two Interactive  (NASDAQ:TTWO)








A-Power Energy  (NASDAQ:APWR)








Companies are selected by screening on finviz.com for abrupt 10% 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.

Five super falls -- one superball
Last week was a rough one for all five of the companies named above, although the reasons varied widely:

  • Natural gas ETF U.S. Natural Gas (which I own) took a big hit when the Department of Energy confirmed that, yes, nat-gas stockpiles are still rising.
  • A-Power Energy -- a General Electric (NYSE:GE) partner in the construction of windmills, and one of this year's absolute hottest stocks -- gave back some of its gains when it missed earnings Thursday.
  • But A-Power shareholders' losses pale in comparison to those of Take-Two owners. The e-gamer's shares fell off a cliff after it warned, that instead of earning $0.64 next year, it could well lose $0.60 per share. (Might want to take a second look at that Electronic Arts (NASDAQ:ERTS) buyout, Take-Two.)
  • While Kongzhong and Energy XXI each shed 14% for no particular reason.

And yet, all five of these stocks still enjoy high ratings on CAPS. Today, let's look at the one that's taken the most punishment this year ... perhaps it has the potential to bounce highest of all.

The bull case for United States Natural Gas
CAPS member FreeMortal argues that: "The glut in supply and depressed demand have put immense downward pressure on price this year. This situation is likely to be temporary, though. Even if the US economy continues to flounder, the rest of the world is poised for further expansion. Energy needs will again outpace production, pushing prices up." (My thoughts exactly.)

After all, as CAPS All-Star mikejw explains: "The price of natural gas has to turn around sooner or later. Can't sell for below production costs. Higher production costs producers will curb their production." (And indeed, we're seeing drillers like Chesapeake Energy (NYSE:CHK) do just that.)

Moreover, RileyBrown predicts that: "As oil continues to climb, there will be a trend toward alternative energies. And I believe with a natural gas glut, it will make sense to exploit this as an alternative. Thus increasing demand and, of course, price."

So when you get right down to it, the bull thesis for natural gas in general, and U.S.N.G. in particular, is pretty simple: Commodity prices are a cyclical phenomenon, and ultimately self-correcting. On the up side of a cycle, high prices inspire lower demand, resulting in prices falling. Conversely, the low prices we see for natural gas today will inspire more homeonwers, energy utilities -- even car companies -- to switch to nat-gas for their fuel needs.

That thesis hasn't met with much success so far this year, as the ETF has shed more than two-thirds of its value. But that's the hard truth of cyclical investing: No one really knows when a cycle will turn. We just know that it must turn eventually. For gold, for oil ... and yes, Virginia, Santa Claus will bring a rally in natural gas prices as well.

Time to chime in
The operative word being: "Eventually." So here's your chance to tell us when you think that turn will begin to operate in U.S.N.G.'s favor.

Will it be this year?

Next year?

10 years?

You tell us -- on Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith owns shares of United States Natural Gas. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 870 out of more than 145,000 members. The Fool has a disclosure policy.

Take-Two Interactive Software is a Motley Fool Rule Breakers recommendation. Electronic Arts is a Motley Fool Stock Advisor pick. Chesapeake Energy is a Motley Fool Inside Value selection. The Fool owns shares of Chesapeake Energy.