As you watch individual stocks surge 10%, 25%, or even higher in a short period of time, don't forget that stocks can fall just as far, just as quickly. Witness the 38% plunge in shares of VASCO Data Security (Nasdaq: VDSI) yesterday, as fourth-quarter earnings were hit hard by contract delays.

Big drops in share price can signal material defects or new risk in a company, but other times it's simply a pullback after a long run-up. Fortunately, we have the Motley Fool CAPS community -- a great resource to help understand the larger picture behind big price drops.

Is the sky falling?
CAPS contains more than the opinions of a crowd; its best-performing investors' opinions do more to shape each company's rating than the picks of their poorer-performing peers. This allows investors to intelligently use the collective wisdom of more than 83,000 CAPS investors to make better investing decisions.

To put this in practice, we'll screen for companies with a stock that has been trimmed at least 25% in the past month and that has a market cap of greater than $100 million and a beta of less than 3. That'll keep us out of the mud that is filled with gyrating penny stocks.

Here's a sample of stocks our screen returned.

Company

CAPS Rating
(out of 5)

1-Month
Price Change

SunOpta (Nasdaq: STKL)

*

(37%)

3Com (Nasdaq: COMS)

**

(27%)

Onyx Pharmaceuticals (Nasdaq: ONXX)

***

(38%)

Select Comfort (Nasdaq: SCSS)

***

(30%)

Tempur-Pedic (NYSE: TPX)

***

(25%)

Inverness Medical (NYSE: IMA)

****

(35%)

Return data is calculated as the difference between the closing price on Jan. 18 and the closing price on Feb. 21, as per MSN Money's screen. Star ranking from CAPS. Data as of Feb. 21.

Let's add a little more color to recent circumstances and find out why some of these stocks have been beaten so badly.

Not berry good
The distinct smell of fresh fruit left on the shelf too long can't be missed, but investors were blindsided when Canadian natural-food seller SunOpta recently reduced its earnings outlook for 2007. Shares plunged nearly 39% in one day as the company noted that although revenues would be strong at greater than $800 million, profits would not be so strong. The company wasn't just disclosing a small profit miss either: earnings per share are now expected to be in the range of $0.12 to $0.14, well below the $0.35 to $0.40 previously given.  

Apparently, quite a few berries have been left to rot, as the company is taking a $9 million to $11 million writedown on inventories within the SunOpta Fruit Group's berry operations. The real kicker though is that the company feels the issues in this segment will likely cause a restatement of past earnings, and will require an independent evaluation to find out what's wrong. The operational issues that were uncovered confirmed the belief of some naysayers that SunOpta's story was a little too good to be true.

And since SunOpta was already airing dirty laundry, management disclosed that it was reserving $3 million in connection with products and services rendered under a supply contract within the BioProcess group. An ongoing dispute with a customer has culminated in legal action by SunOpta, and the company feels that the uncollected amount may end up staying that way -- uncollected.

While the company maintains that other segments are running smoothly, it nonetheless decided to hold back on any guidance for 2008 until it can get a handle on the situation. Shareholders aren't that patient though, and numerous class action lawyers have been throwing rotten tomatoes at SunOpta in the form of lawsuits alleging misrepresentation and overstated earnings.

CAPS investors have put SunOpta squarely in the doghouse, with a lowly one-star rating -- the same rating it has held all year, even prior to the restatement. A strong majority -- 66 of the 98 All-Stars rating the company -- are on record with the belief that it will underperform the market in the future.

Ultimately, your own research into the reasons behind a fall is more important than collective opinions. But these collective opinions can quickly focus your due diligence and even point out pitfalls you may not have seen.

Add your take on these or any of the 5,400 stocks that 83,000-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.

The Motley Fool Hidden Gems analyst team searches for high-quality -- and sometimes beaten-down -- companies before they break higher. To see what stocks lead analysts Tom Gardner and Bill Mann have recommended before they soared, take a free 30-day trial.

Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Select Comfort is a Hidden Gems recommendation. Vasco Data Security is a Stock Advisor recommendation. The Fool's disclosure policy is made of sugar and spice and everything nice.