Why Did My Stock Just Die?

Your stock just took a nosedive -- but don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here's the latest crop of cratered stocks that could provide a possibility for profit:

In yet another wild swing, the market went to the polar opposite of its move the other day and roared ahead 191 points, or 1.6%, as a much better jobs number outweighed other concerns. It's a big turnaround, and appropriate for a month known for madness, so stocks that went down by large percentages are bigger deals still.

The devil's in the details
This is an all too familiar and distasteful feeling for investors in Amylin Pharmaceuticals. Back in October, they got crushed when Amylin lost almost half its market value after the FDA rejected its diabetes drug Bydureon, saying the drug needed more testing. 

So yesterday, Amylin and partners Eli Lilly (NYSE: LLY) and Alkermes announced results from a new clinical trial against Novo Nordisk's (NYSE: NVO) Victoza (which weren't part of the regulatory process) and came up short. Apparently, way short. While the pharmaceutical still plans to resubmit its application to market Bydureon for the third time, investors aren't waiting around again.

CAPS member MILLERMAN doesn't see much hope for Amylin from here on out, and despite the bullish sentiment from the broader CAPS community, it looks particularly tough for the drugmaker. But you can let us know on the Amylin Pharmaceuticals CAPS page whether it will be able to diagnose the problem and get back on track.

A cloudy outlook
Clinical research organization Kendle International sold off sharply yesterday over the big fourth-quarter loss it reported, reversing a year-ago profit, and it's down another 11% this morning. Sure, there were a bunch of things not to like in the report, such as the stubbornly high days sales outstanding that came nowhere near what was promised, but the foundation for its future growth, the new business awards, jumped 13% to $152 million, giving some hope that there remains something to build on.

A month ago Charles River Labs was reporting losses, though excluding one-time charges it turned a profit, as did Pharmaceutical Product Development (Nasdaq: PPDI), as its clinical development services segment -- the same one Kendle primarily operates in -- had a strong showing.

There's new management coming into place in May, and that might herald a new, better era for the CRO, and could help explain the bullish sentiment expressed by the CAPS community. Over 98% of the All-Stars rating Kendle believe it will ultimately outperform the broad market averages, though there's no reason you should contract out your own research to them. Add your thoughts on the Kendle International CAPS page, then follow along with its progress by putting the stock on your watchlist.

That sinking feeling
And it seems the market is burning up Sigma Design the same way for an earnings miss that ignores the larger picture.

Famed value investor John Neff once noted that investors are great at extending straight lines far out into the future, which is what the market and its analysts are apparently doing with Sigma's revenue run rate. But as the Fool's Anders Bylund points out, such smooth charts don't reflect reality, and while the first half of the year might be soft, the back half holds the promise for much stronger growth.

Sigma's on board with Motorola Mobility, Cisco (Nasdaq: CSCO), and others, and Sigma-based boxes for IPTV solutions are expanding. There's no reason to think Sigma Designs won't be laughing at this plunge later.

Back in Janaury, highly rated CAPS All-Star Chemdawg colorfully mused over how "potential" can backfire, but with a sound financial footing it's still a bargain:

that being said, I still like the valuation and it posted almost a buck a share in cashflow in 2010. priced at roughly 110% of book value....No Debt

If there's still too much risk for you, add Sigma Designs to the Fool's free portfolio tracker to see whether it will ever really live up to its potential or will simply crash and burn again.

Ready for a resurrection
Just because your stock has taken a beating doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look at what's happened to your stock can give you an edge over other investors who just react to the market's lead.

That's why it pays to start your own research on these stocks on Motley Fool CAPS where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether it's ready to come back from the dead.