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 VIVUS fell more than 55% last Friday after a Food and Drug Administration panel recommended against approving its anti-obesity drug.

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 165,000 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

Barnes & Noble (NYSE: BKS)

*

(24.2%)

Amedisys (Nasdaq: AMED)

**

(42.3%)

American Apparel (NYSE: APP)

**

(23.1%)

Source: Motley Fool CAPS. Price return June 25 through July 20.

Barnes & Noble
Many CAPS members are concerned about trends toward digital technology threatening Barnes & Noble's bricks-and-mortar business. While the company's push to become more of a digital player is meant to step up its game amid tough competition, the added investment is expected to deal a significant blow to its fiscal 2011 bottom line. Barnes & Noble is trying to boost sales of its Nook e-reader, which is in a heated price war with competitors Sony (NYSE: SNE) and Amazon.com (Nasdaq: AMZN), and pursue other digital opportunities to make it a viable long-term competitor.

Normally, increasing investments to keep pace with new technologies and competitors would be welcome news to investors, but in this case the associated weak guidance led to a drop in share price. At this point, a lackluster 69% of the 399 CAPS members rating Barnes & Noble expect it to outperform the market. 

Amedisys
On top of a weak second-quarter outlook, home-health-care provider Amedisys is dealing with a couple of federal investigations sparked by a Wall Street Journal article questioning the business practices of Amedisys and several peers, including Almost Family (Nasdaq: AFAM). Shares were slammed in recent weeks, and the company took its case directly to its shareholders in a letter defending its business practices.

Some CAPS members believe the selling of shares is overdone, as short interest in the stock is more than an eye-popping 40%. But with a CAPS rating that's been stuck at two stars for nearly two years, the overall opinion of the 946 CAPS members rating Amedisys is of a stock that lags the market.

American Apparel
While teen-focused retailer Aeropostale (NYSE: ARO) blew past Wall Street's first-quarter earnings expectations, the retail environment hasn't been as kind to American Apparel. In May, it reported a wider first-quarter operating loss and warned of possible default on its debt. It's since secured a lifeline from a billionaire investor and amended its credit agreements, but will also now shell out more money in higher interest payments.

Some CAPS members see a challenging turnaround ahead, as only about 88% of the 316 CAPS members rating American Apparel see it beating the broader market.  

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 165,000-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.