Individual stocks can rise 10%, 25%, or even higher in a short time. And they can fall just as far, just as quickly. For example, shares of Telestone Technologies fell 24% last Friday, a day after the company reported a drop in second-quarter earnings despite a 37% jump in 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 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 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 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 |
---|---|---|
Overstock.com |
* |
(29.8%) |
Corinthian Colleges |
** |
(51%) |
SandRidge Energy |
***** |
(24.3%) |
Source: Motley Fool CAPS. Price return July 23 through Aug. 17.
Overstock.com
Similar to Amazon.com's
Corinthian Colleges
For-profit education companies have received more scrutiny lately, after the Government Accountability Office made more allegations regarding questionable business practices of several schools. Government data showed that Corinthian Colleges ranked among schools such as ITT Educational Services
SandRidge Energy
SandRidge Energy hasn't been sitting still as its shares steadily declined over the past year: It made some significant moves to gain more oil exposure amid weaker natural gas prices, among them its purchase of Arena Resources. While peers Brigham Exploration
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 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.