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 of semi-trailer maker Wabash National fell 18% last Thursday when management announced it would issue shares equal to about 35% of the common shares outstanding on the heels of huge gains in the stock price this year.

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 165,000 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 past four weeks, and they have a market cap greater than $100 million and a beta of less than 3.

Company

CAPS Rating
(out of 5)

4-Week
Price Change

Sears Holdings (Nasdaq: SHLD)

*

(27.2%)

SunPower (Nasdaq: SPWRA)

***

(35.4%)

North American Palladium (AMEX: PAL)

*****

(32%)

Source: Motley Fool CAPS. Price return April 30 through May 25.

Sears Holdings
Shares of Sears followed their outstanding gains in 2009 with a strong start this year, but many CAPS members didn't bite on the momentum and dropped the company's rating at the start of 2010. Sears' recent earnings report wasn't encouraging, helping to wipe out much of the recent gains. The company did show improvement in same-store sales, with Kmart rising 1.7%, topping competitor Wal-Mart's (NYSE: WMT) decrease in U.S. comps. And like home improvement retailer Home Depot (NYSE: HD), Sears' U.S. same-store sales increased for the first time in several years.

But while Home Depot generated strong bottom-line growth, Sears experienced plummeting quarterly earnings hurt by heavy promotions and weak margins. Despite some improvement in the economy, Sears' recent showing smacks of weakness and doesn't give some CAPS members much confidence. Today, a lukewarm 70% of the 2,182 CAPS members rating Sears expect it to outperform the broader market.

SunPower
Shares of SunPower have accelerated their decline since the company announced disappointing earnings a few weeks ago. The company's reported net income for the first quarter missed Wall Street estimates by a wide margin, despite a 64% increase in quarterly revenue. It's not as though SunPower could have avoided shareholder selling, though -- solar peers First Solar (Nasdaq: FSLR) and LDK Solar (NYSE: LDK) both blew past analyst expectations for the quarter and provided rosy forecasts, but still, their shares declined.

Several factors have spooked solar sector investors lately, including the potential effects a nose-diving euro might have on the companies' bottom lines. Some CAPS members see the drop in SunPower as a buying opportunity, but many still have concerns about the larger sector trends. In CAPS, nearly 90% of the 1,595 members rating SunPower believe it's a market-beating investment.  

North American Palladium
The steep drop in palladium prices and resulting sell-off in shares of North American Palladium have dealt a sharp blow to the company's value. The CAPS community took the company's rating down a notch briefly to four stars, but many investors are holding the bullish line, especially with North American Palladium making a big move into gold. The company has several projects in its pipeline and is funding the exploration of several mines, keeping CAPS members positive about its future despite the recent drop in its shares. Overall, 96% of the 1,025 CAPS members rating North American Palladium see it outperforming the S&P 500.

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 5,400 stocks that 165,000-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.

First Solar is one of dozens of stocks selected by the Motley Fool Rule Breakers service to beat the market over the long haul. To see all the stocks David Gardner and the analyst team have recommended, take a free 30-day trial today.

Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He doesn't own shares of companies mentioned here. The Home Depot and Wal-Mart Stores are Inside Value recommendations. First Solar is a Rule Breakers selection. The Fool's disclosure policy is made of sugar and spice and everything nice.