Individual stocks can rise 10%, 25%, or even higher in a short period of time. And they can fall just as far, just as quickly. For example, shares in Sequenom
Big drops in share prices can sometimes signal material defects or new risks. But at other times, they're simply pullbacks along with the larger pessimism about 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 offers 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 130,000 CAPS members to make better decisions.
We'll use CAPS' handy stock-screening tool to quickly zero in on companies whose prices have fallen at least 20% in the past four weeks, and that have a market cap greater than $100 million and a beta of less than 3. If you want to run this screen, please do -- just keep in mind that the results will update with the market.
|
Company |
CAPS Rating
|
4-Week |
|---|---|---|
|
Eastman Kodak |
* |
(26.9%) |
|
Satyam |
*** |
(32.8%) |
|
Myriad Genetics |
*** |
(25.9%) |
Source: Motley Fool CAPS. Price change April 9 through May 5.
Eastman Kodak
Synonymous with old film technology, Eastman Kodak continues to struggle to shake its reliance on what was once a lucrative business and diversify with new products. Lately, consumers have been holding back on purchasing things like digital cameras, film, and paper and ink supplies, forcing retailers to cut inventories.
Shares in Kodak fell again recently: The company announced a $353 million first-quarter loss as sales dropped 29% from the same quarter a year ago. Kodak's loss was nearly triple the loss from a year ago. The company also announced that it was eliminating its dividend, laying off thousands of employees, and beginning other cost-cutting moves.
While its cash balance dropped 40% in the quarter, the company is banking on things to pick up later on in the year. But many CAPS members see Eastman Kodak continuing down the road to failure, with about 45% of the 518 members rating the company saying they're bearish today.
Satyam
Many large corporations such as IBM
The company that aims to become Satyam's new majority owner, Tech Mahindra, outbid competitors and is in the process of bringing its total stake to 51%. Satyam has lost some big clients because of the scandal, so Tech Mahindra is looking to rebuild its reputation. It will be quite a feat to resurrect the company, however, because the real financials are still being sorted out and it was recently reported that an additional $100 million might be missing. Many CAPS members say they think the company's fundamental business is sound, with 95% of the 1,029 members rating Satyam believing that it will not only survive, but also outperform the market.
Myriad Genetics
Many investors had become accustomed to Myriad's year-over-year growth of 50% or better for the past five quarters, and gave shares a beating when the company posted "only" 47% revenue growth in its molecular diagnostics segment for the most recent quarter. The company plans to spin off its drug-development segment, leaving the diagnostic test segment with it. Many investors see big potential for growth, as more women are screened for ovarian and breast cancer using the company's BRACAnalysis test. In CAPS, nearly 90% of the 368 members rating Myriad Genetics expect it to beat the market.
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 more than 5,200 stocks that 130,000-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.
