3 Stocks Stopping the Presses

You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?

By pairing the latest news with the collective wisdom of our 170,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.

The following stocks have all made big moves over the past five days.

Source: Motley Fool CAPS; % change from June 30 to July 8.

Can't fight this fire
It might seem a bit unusual that flooring specialist Lumber Liquidators was hurt by the continued crumbling condition of the housing market. After all, 90% of its business comes from homeowners who are fixing up their homes, so it's not like homebuilder Toll Brothers (NYSE: TOL), which needs new boxes to go up every month just to survive. Housing's weakness should actually be a growth driver as more people stay put and fix up what they have.

But the pricing collapse puts more people underwater on their mortgages, providing little incentive to make improvements. After what looked like a strong first-quarter start, Lumber Liquidators said consumers suddenly turned very cautious about where they'd be spending their discretionary dollars. New hardwood floors weren't one area they were considering, and the flooring company sharply whittled back guidance.

While Lumber Liquidator's stock was put through a wood chipper, giving pause to investors in other businesses reliant upon the fixer-upper shopper -- such as Home Depot (NYSE: HD) or Lowe's -- it doesn't mean you should pick up the shavings just yet. The stock is still expensive relative to its big box peers and only comparably valued to other flooring options, such as carpet maker Mohawk Industries (NYSE: MHK).

It's going to take a turnaround in the jobs situation before housing can begin to recover, and as the jobs report last Friday showed, that looks like it's going to be a long way off. I think there are better opportunities right now for your cash, but CAPS member irishred1 says you need to have an appropriately long-term horizon to see the value: "Short term bleh … long term expanding store count in US and Canada, looking into Europe."

Lay down your own opinion on the Lumber Liquidators CAPS page and let us know why you think the flooring specialist can come back from this drop.

A bright spot
Second-quarter guidance also crushed network-equipment maker Ixia, which said Asian economies were also slack and late orders from major clients depressed demand, though it was able to meet the orders from Cisco, its largest customer. It might take several quarters for the situation to stabilize, but its other customers were still placing orders, albeit late in the quarter, suggesting that future quarters won't look so bad in comparison.

As much as that might be true, though, investors would do well to keep in mind that any bulge it sees in the third quarter probably wouldn't be repeated either, since it was simply the carryover from the second. And though Japan's weakness was expected, the softness experienced in China and India was not.

Still, 82% of CAPS members rating Ixia think it can go on to outperform the broad market averages. Follow along on how fast it can recover by adding the equipment maker to the Fool's free portfolio tracker.

Love me, love me not
Well, if Lumber Liquidators was being weighed down by housing, why was mortgage insurer PMI Group soaring? When you're as beaten down as much as that sector is, even news that's "less bad" is good.

Standard & Poor's said there was no need to downgrade its debt rating further into junk territory than it already is. Basically, the rating agency said, "You stink, but we don't think you're going to stink any worse." Investors thought it was just like a love letter to the industry and bid up the shares of MGIC Investment and Radian Group (NYSE: RDN) as well.

As bad a shape as the industry is in, changes implemented in how things operate today make things different from in the past, and CAPS member kylehusky believes that means PMI Group, although risky, will ultimately recover.

Strict underwriting and higher prices will lead to increased profitability for PMI. The recent decline in housing prices keeps more policies active for longer periods, boosting revenue and profits. A spect. play here.

Add the stock to your watchlist to see whether investors are willing to whisper additional sweet nothings in the ear of the mortgage insurer.