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 Vical fell 32% on Wednesday after the blood-vessel drug it licensed to sanofi-aventis failed a late-stage clinical trial.
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 170,000 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 three.
Company |
CAPS Rating
|
4-Week |
---|---|---|
Arena Pharmaceuticals |
** |
(73.6%) |
China-Biotics |
** |
(34.6%) |
Genoptix |
***** |
(17.1%) |
Source: Motley Fool CAPS. Price return Aug. 27 through Sept. 21.
Arena Pharmaceuticals
Recent weeks have been brutal for Arena Pharmaceuticals as shares have plunged deeper into penny stock territory. More investors are questioning the future potential of its obesity drug lorcaserin to gain approval from the Food and Drug Administration in October after an FDA advisory panel recommended against approval because of safety concerns. The cold reception to the drug came just a couple of months after a similar rejection for Vivus'
China-Biotics
China-Biotics posted strong sales and earnings growth in its most recent quarter, but similar to the investor scrutiny of China Marine Food Group's
Genoptix
While larger competitor Genzyme's
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 170,000-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.