Individual stocks can rise 10%, 25%, or even more in a short period of time. And they can fall just as far, just as quickly. For example, shares of PMI Group, which have brought huge gains since the market's March low, fell 17% after Goldman Sachs initiated coverage on the mortgage insurance sector with a sell rating on the stock.
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 145,000 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 20% 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 |
---|---|---|
NutriSystem |
** |
(28.3%) |
Con-way |
** |
(20.8%) |
MercadoLibre |
*** |
(24.7%) |
Source: Motley Fool CAPS. Price return Dec. 28 through Jan. 22.
NutriSystem
NutriSystem has been busy expanding its presence in retail stores like Wal-Mart Stores, Sam's Club, and Walgreen's
Con-way
While shipper FedEx
The company's third-quarter profit fell by nearly two-thirds because of weak demand and excess capacity -- which all adds up to pricing pressure -- and some investors are concerned about the increasing earnings pressure Con-way and peers like YRC Worldwide will face. Some investors see potential for truckers in an improving economy, but Con-way earns just a two-star rating in CAPS, with only 76% of the 110 CAPS members rating the stock expecting it to beat the broader market.
MercadoLibre
MercadoLibre, an e-commerce company based in Argentina that's often described as a Latin American eBay
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 nearly 5,400 stocks that 145,000-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.