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 Satyam Computer Services plummeted 24% last Friday, after the company said it would delist from the New York Stock Exchange.
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 3.
Company |
CAPS Rating
|
4-Week |
---|---|---|
AMAG Pharmaceuticals |
** |
(26.5%) |
Power-One |
*** |
(22.1%) |
National Bank of Greece |
**** |
(17.6%) |
Source: Motley Fool CAPS. Price return Sept. 3 through Sept. 28.
AMAG Pharmaceuticals
AMAG Pharmaceuticals has big plans for its key revenue driver Feraheme, which received FDA approval last year. The company is aiming to expand its use in the U.S., and it's seeking approval in Canada and Europe. But shares are a long way from where they were when Feraheme was approved. The stock took a hit when the company recently canceled an investor conference because of a meeting with the FDA over safety issues. With a high percentage of shares being sold short, and competition from established drugs like sanofi-aventis'
Power-One
While fellow power inverter maker Satcon Technology's
National Bank of Greece
National Bank of Greece recently posted an expected steep drop in second-quarter profit, and later took investors by surprise with an announcement to raise nearly 3 billion Euros in a rights issue. The bank recently passed the European stress tests, along with European bank peers like Banco Santander
Putting the increased scrutiny aside, the additional capital will help bolster NBG's balance sheet ahead of its stress test later this year. Many CAPS members remain bullish on the banking giant. About 96% of the 1,341 CAPS members rating National Bank of Greece see it outpacing the market averages.
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 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.