Individual stocks can surge 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 radioactive waste handler Energy Solutions lost 44% Tuesday when the company lowered guidance for 2008 below expectations.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks after a long run-up. 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 115,000 CAPS members to make better decisions.

We'll use CAPS' handy stock screening tool to quickly zero in on companies that have been slashed by at least 35% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than 3.

Here's a sample of stocks our CAPS screen returned:


CAPS Rating
(out of 5)

Price Change

Ford (NYSE:F)



American Capital (NASDAQ:ACAS)



Valero Energy (NYSE:VLO)



National Oilwell Varco (NYSE:NOV)



Ingersoll-Rand (NYSE:IR)



Source: Motley Fool CAPS. Price return from Sept. 19 through Oct. 13.

U.S. automakers were struggling even before the tight credit markets came along to make it even tougher to get into a new Ford. As such, Fitch Ratings expects Ford to have cash problems sometime next year. Ford and GM aren't the only ones in a bind, either -- foreign automakers Toyota (NYSE:TM), Honda, and Nissan also have seen sales falling, too.

Ford does have some options to raise cash, though, like selling its Mazda stake or tapping a loan program recently signed by President Bush. Some investors think that gives Ford an edge, but only 59% of the 5,606 CAPS members rating Ford are expecting it to outperform the market.

American Capital
On top of the general market pessimism, investors weren't happy when JPMorgan Securities downgraded American Capital, Limited recently, believing the firm could have trouble maintaining its dividend. With its diverse portfolio of investments in private businesses, though, some investors think American Capital is being unfairly punished and could jump from recent levels.

Just maintaining its dividend payout of $1.05 per quarter would give American Capital investors a whopping 27% yield. Even if the payout is cut back, nearly 96% of the 1,790 CAPS members rating American Capital believe the firm has the right stuff to beat the market.

While the recent fall in oil prices should help refiners, the lower crack spread is more of a concern as it eats into margins at Valero. Hurricane Ike also stopped production at Valero's Houston refinery, though it expects to have its Port Arthur site back up within days.

As commodity markets remain volatile, many investors see the potential for Valero to fall further. But a solid majority of the 4,036 CAPS members rating Valero -- more than 95%, in fact -- believe the refiner has great potential to outperform the market over the long term.

National Oilwell Varco
Farther up the oil food chain, equipment supplier National Oilwell Varco's shares have been battered lately as well. But many see the long-term demand for drillers from oil giants like Chevron (NYSE:CVX) remaining, thus benefiting companies like Varco that provide equipment to them.

Many investors believe energy demand will continue to outstrip supply, though, putting the market wind at drillers' backs. This bodes well for National Oilwell Varco over the long haul, and more than 98% of the 2,012 CAPS members weighing in on the company agree and have placed bullish bets on it.

Industrial and commercial product manufacturer Ingersoll-Rand is getting more investor interest as a great value play lately. Weaker North American and Western European markets forced Ingersoll-Rand to cut its profit forecasts for the third quarter and full year 2008, but strong fundamentals and a diversified business give investors confidence in its long-term potential. As such, more than 97% of the 828 CAPS members rating Ingersoll-Rand see it beating the S&P.

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 115,000-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.

In the coming weeks, Fool Co-Founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He owns no shares of companies mentioned here. American Capital is an Income Investor recommendation. The Fool's disclosure policy is made of sugar and spice and everything nice.