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 of XenoPort (Nasdaq: XNPT) plummeted 66% to new all-time lows when it received a surprise denial from the FDA for its restless leg syndrome treatment Horizant.

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 150,000 CAPS members to make better decisions.

We'll use CAPS' handy stock screening tool to quickly zero in on companies with three factors: their prices have fallen at least 15% in the last four weeks, and they have a market cap greater than $100 million and a beta of less than 3.

Company

CAPS Rating
(out of 5)

4-Week
Price Change

American Superconductor (Nasdaq: AMSC)

**

(22.9%)

Penn National Gaming (Nasdaq: PENN)

**

(15.7%)

Energy Conversion Devices (Nasdaq: ENER)

***

(16.1%)

Source: Motley Fool CAPS. Price return Jan. 29 through Feb. 22.

American Superconductor
Energy technology firm American Superconductor's shares were flying high recently after strong sales growth in the first two quarters of its fiscal year. It followed up that strong sales growth with a 95% revenue jump in its recently announced third quarter, coupled with earnings that topped analysts' expectations, but investors were more focused on the company's outlook which implied a slowdown in fourth-quarter growth. Investors acknowledge there's plenty of opportunity for growth in its largest market of China, but concentration of its revenue in a small list of companies still makes many CAPS members wary, as only a lackluster 81% of the 628 members rating American Superconductor expect it to outperform the market.

Penn National Gaming
It's been a tough time for casino stocks lately with Penn National joining others like MGM (NYSE: MGM) and Las Vegas Sands (NYSE: LVS) in watching their shares fall after a round of weak quarterly earnings reports. While the latter two companies are still waiting for a turnaround in Las Vegas, Penn National has been hit by weakness in its operations in other regions in the U.S. Wall Street was looking for stronger earnings and a brighter 2010 outlook than what Penn National delivered, as gamblers' tighter wallets have weighed on its top line. In CAPS, 90% of the 375 members rating Penn National Gaming expect it to beat the broader market.

Energy Conversion Devices
Energy Conversion Devices was among other solar companies like Evergreen Solar (Nasdaq: ESLR) to report weak quarterly earnings this earnings season. While lower-cost Chinese players like JA Solar had strong quarters, Energy Conversion posted a steep quarterly loss despite higher sales than expected, driving shares to multi-year lows. It expects its low utilization rates to drop even further this quarter, which is expected drive up its per watt costs, as it tries to reign in its ballooning inventory levels. On the bright side, Energy Conversion Devices doesn't expect to take a direct hit to average selling prices from proposed subsidy cuts in Germany, as it doesn't have a large focus in that market. Despite the recent gloomy news, 92% of the 1,285 CAPS members rating Energy Conversion Devices remain bullish on prospects for market-beating returns.           

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 5,400 stocks that 150,000-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.

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 51 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. The Fool's disclosure policy is made of sugar and spice and everything nice.