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:


CAPS Rating
(out of 5)

Friday's Change

Gap (NYSE: GPS)**(17.5%)
China Yuchai (NYSE: CYD)***(14.2%)
LDK Solar (NYSE: LDK)***(11.6%)

Worries about global financial concerns caused stocks to tumble almost 100 points Friday, or almost 1%, so stocks that went down by even larger percentages are pretty big deals.

The devil's in the details
Maybe we should just keep our cotton-pickin' hands off clothing retailers these days. The commodities crisis is sending the price of cotton soaring and retailers from Gap to Aeropostale (NYSE: ARO) and Wet Seal (Nasdaq: WTSLA) have reported earnings that have left them looking like they were eaten by boll weevils.

Gap had holes chewed in its progress even though revenues matched analyst expectations (down 1%) and earnings beat forecasts by a penny. But cotton prices and other rising commodity costs are going to hurt business the rest of the year, so Gap was forced to cut guidance. That reality sunk Gap's shares. Even though cotton prices are 20% higher than where they started the year, the retailer says cost per clothing item will be up 20% more in the back half of 2011.

At around 10 times earnings, Gap looks cheap, and based on the amount of free cash flow it produces, the apparel chain is certainly much less expensive than most of its counterparts. It trades at 13 times FCF while Wet Seal goes for 20 times and American Eagle Outfitters is at 23 times FCF. Highly rated CAPS All-Star thevossman says the newly discounted stock price makes Gap a bargain: "After the huge drop 5/20/11, it's a good time to enter. GAP has ... recovered well in the past in these cases, & I think they will again."

You can add Gap to your watchlist and let us know on the Gap CAPS page whether cotton will continue to reign over the retailer.

Engines seizing
We knew that Chinese diesel engine maker China Yuchai was going to hit rough pavement as a result of analyst doubts about the country maintaining its torrid growth. Truck sales surged 60% last year, and while that was good for Yuchai's bottom line, it's tough to maintain that momentum. The government's cracking down on an overheating economy is going to limit growth, too, so investors in Cummins (NYSE: CMI) might want to take note, as it is Yuchai's primary competitor there.

But last week's sell-off had little to do with sales and everything to do with Yuchai's president's decision to retire. Analysts downgraded the stock because of his pending departure, but it seems unlikely he was the visionary that  the market's reaction to the news suggests.

More than 90% of the 381 CAPS members rating the engine maker agree that it will continue to beat the market. Drive on over to the China Yuchai CAPS page to add some torque to your rationale for why it's not yet ready to stall out.

A cloudy forecast
The solar industry is operating under a cloud these days as subsidies are slashed and more cuts are planned. While Italy was the focus of dramatic changes, Germany is now looking to make significant additional cuts. That could be difficult for LDK Solar, which generated 20% of its revenues from Germany last year, and Yingli Green Energy (NYSE: YGE), which realized 28% of sales there.

But the market isn't favoring LDK, either, particularly for offering debt, and with rates rising recently, it had to pull its plans to make an offer. That sent the solar shop's shares down sharply.

With 93% of the CAPS members who rated LDK marking it to outperform the broad market averages, it seems they believe the sun will come out tomorrow for it. Shine a light on your opinion on the LDK Solar CAPS page and let us know if you think there's a bright future yet for solar.

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 on Motley Fool CAPS at what's happened to your stock can give you an edge over investors who just react to the market's lead. You can decide for yourself whether it's ready to come back from the dead.