Individual stocks can rise 10%, 25%, or even more in a short period of time. And they can fall just as far, just as quickly. For example, shares of Houston American Energy fell nearly 29% one day a couple weeks back when an Internet news site posted an article that described the company as "set up for collapse."
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 160,000 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 20% in the past four weeks, and they have a market cap greater than $100 million and a beta of less than 3.
Company |
CAPS Rating
|
4-Week |
---|---|---|
Star Scientific |
* |
(31.8%) |
Ballard Power Systems |
* |
(20.6%) |
Santarus |
*** |
(30%) |
Source: Motley Fool CAPS. Price return March 26 through April 20.
Star Scientific
The smokeless tobacco market is a growing multibillion- dollar one that companies like Altria
Ballard Power Systems
Canadian company Ballard Power Systems has been in the fuel-cell game for a long time, but the past decade has been a very rough experience for shareholders in the company -- the stock has lost more than 90% of its value in that time. The company forecasts 35% revenue growth this year, and some investors see potential for fuel cells to play a greater role in alternative energy, but shares haven't been able to gain any sort of traction lately, and other forms of alternative energy -- mainly wind and solar -- have been diverting investors' attention away from fuel cells. CAPS members don't show much support for the stock, with only 62% of the 345 members rating the company predicting it will be a market-beating investment.
Santarus
Santarus left 2009 on a positive note with the approval of its over-the-counter version of heartburn medication Zegerid, which triggered a $20 million milestone payment from its marketing partner Merck
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 other 5,400 stocks that 160,000-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.