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 Perfect World fell 25% on Monday after posting uninspiring results and forecasting less-than-perfect second-quarter revenue.   

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. 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
(out of 5)

4-Week
Price Change^

priceline.com (Nasdaq: PCLN)

*

(27.4%)

TiVo (Nasdaq: TIVO)

**

(48.1%)

Visa (NYSE: V)

***

(24.3%)

Source: Motley Fool CAPS.
^April 23 through May 19.

priceline.com
priceline's shares had been flying high, mimicking the rise of Chinese counterpart Ctrip.com (Nasdaq: CTRP), as both companies posted big numbers in the first quarter and beat analyst expectations. But after posting 53% growth in total travel bookings, the market punished priceline's shares for its second-quarter outlook. While Ctrip is benefitting from China's domestic travel market being insulated from the volcanic ash in Europe, priceline's business isn't so immune and is taking a hit.

With a one-star rating in CAPS, some members remain cautious on its ability to continue to generate hefty growth numbers and repeat past stock gains. In CAPS, a lackluster 72% of the 966 members rating priceline expect it to outperform the broader market.     

TiVo
If there's one thing that is constant, it's that litigation is never settled, even when it's settled. Things had been looking up for TiVo after it received a favorable court ruling in its patent case against DISH Network (Nasdaq: DISH) earlier this year, leaving Dish on the brink of shutting down DVR boxes and TiVo shareholders with huge gains. But investors are back at square one after a recent decision by an appeals court to review its earlier decision.

The news led to a sell-off that wiped out previous gains, and while some CAPS members believe the odds are in TiVo's favor to either win the case or score a settlement with DISH, the rehearing continues to add uncertainty. Overall, 79% of the 1,096 CAPS members rating TiVo believe it is a market-beating investment.

Visa
Both Visa and MasterCard (NYSE: MA) posted better-than-expected earnings in the first quarter as more consumers reached for their debit and credit cards. Both companies are optimistic about the future, but a recently proposed law to curb credit card fees has dealt a blow to shares of both companies. Visa's CEO said the proposal could cause a short-term drop in debit card transactions, but not much long-term risk for the company compared to the damage it could do to issuers and consumers.

With Visa positioned for growth in emerging markets, and its proposed purchase of online payments company CyberSource (Nasdaq: CYBS) set to boost its payment technologies capabilities, many CAPS members share the same bullish sentiment. Overall, 94% of the 4,547 CAPS members rating Visa are bullish.     

Ultimately, whether 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 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.

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 57 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. Ctrip is a Motley Fool Hidden Gems selection. priceline is a Motley Fool Stock Advisor pick. Perfect World is a Motley Fool Rule Breakers recommendation. The Fool's disclosure policy is made of sugar and spice and everything nice.