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, investors in American Greetings were greeted with a 23.3% drop in shares in a single day last week, thanks to a reported 56% decline in its fiscal first-quarter earnings.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks after a long run-up. 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 investors' votes carry additional weight in shaping each company's rating. That way, investors can intelligently use the collective wisdom of more than 110,000 CAPS investors to make better decisions.

We'll use CAPS' handy stock-screening tool to quickly zero in on companies whose stocks have been slashed by at least 25% in the past four weeks and that have a market cap greater than $100 million and a beta of less than 3. Using those benchmarks will keep us out of the mud-filled world of gyrating penny stocks.

Here's a sample of stocks our CAPS screen returned:


CAPS Rating
(Out of 5)

Price Change

XM Satellite Radio (NASDAQ:XMSR)



Rite Aid (NYSE:RAD)



Under Armour (NYSE:UA)



Oshkosh (NYSE:OSK)



Terex (NYSE:TEX)



Return data is calculated as the difference between the closing price on June 3 and the closing price on July 1, per Yahoo! Finance. Star rankings from CAPS.

XM Satellite Radio
After waiting for a long 17 months, the finish line for the merger with Sirius Satellite Radio (NASDAQ:SIRI) is almost in sight. But that hasn't kept the market -- led by one analyst in particular -- from kicking XM and Sirius while they're down. With speculation anew that satellite-radio services may not make up the next great growth market, CAPS investors have sent XM back to a lowly one-star rating recently. More than 38% of CAPS investors rating the company believe it will underperform the market.

Under Armour
Shares of Under Armour had their brief moment of glory, but now they've sagged by more than 40% this year. UA's performance was better than expected in the first quarter, but it's clear that lots of clothes are sitting in the warehouse, because inventory rose 110% year over year. Among those in CAPS, a little more than 90% of the 1,918 investors who rate the company offer a bullish outlook.

Clothing and footwear aren't the only inventory items piling up, now that the economy appears to be in worse shape than many folks previously thought. In its first quarter, truck and construction-equipment maker Oshkosh reported a 32% year-over-year jump in finished goods, a figure that signals that a lot of trucks are sitting in a parking lot, tying up cash. But then it got worse -- Oshkosh lowered its third-quarter and year-end sales outlook, and the stock fell by 33.5%. Oshkosh has quickly fallen from its five-star graces in CAPS, with 38 of the 592 investors rating the company now seeing it underperforming the S&P going forward.

Capital-equipment supplier Terex maintains a nice cash cushion and a price-to-earnings ratio of only 8.2, but not even an impressive first-quarter earnings report shook fears about a global slowdown in project spending. CAPS investors aim to take advantage of the pessimism, though. The vast majority -- 882 out of 900 -- see enough value in these shares today to vote bullishly.

Rite Aid
Drugstore operator Rite Aid followed a whiff last quarter with a fourth straight loss in its first quarter of 2008. The company, along with CVS (NYSE:CVS), has also run into legal trouble for selling expired items to undercover investigators in New York. In CAPS, 14% of the 930 investors rating the company have a bearish outlook on Rite Aid.

Ultimately, whether you believe a fall in any stock is warranted, your own research is more important than collective opinions are. 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 5,500 stocks that 110,000-plus investors 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.