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.

Shares of VeraSun Energy, for example, lost more than half their value when it was reported that the company might be looking into Chapter 11 bankruptcy protection. They continued to drop as the rumors became true.

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. The votes of its best-performing members 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 120,000 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 25% 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

The New York Times Co. (NYSE:NYT)









Whole Foods Market (NASDAQ:WFMI)



CapitalSource (NYSE:CSE)



Source: Motley Fool CAPS. Price return from Oct. 10 through Nov. 3.

The New York Times
As advertising dollars continue to dwindle, layoffs are becoming more common at many newspapers. The New York Times hopes to stay alive and avoid adding to the cuts it initiated earlier this year by squeezing costs out of operations.

But there's little to get excited about at the Times -- third-quarter profits were down 51%, with further writedowns to come. The high yield may be tempting, but the question of whether future earnings will be able to continue to support dividend payments is one reason only 38% of the 274 CAPS members rating The New York Times expect it to outperform the market.

Mobile device maker Palm arguably has its best days behind it. Once a popular brand among consumers, its smartphones have fallen behind Research In Motion's (NASDAQ:RIMM) BlackBerry and Apple's (NASDAQ:AAPL) iPhone as its product lineup fails to captivate users.

The company's fiscal first-quarter loss grew to $41.9 million, and it expects further declines for its second quarter. With this holiday season looking sluggish for gadget retailers, only 60% of the 763 CAPS members rating Palm are bullish.

As U.S. regulators try to jump-start domestic banks, other countries are making similar efforts. Dutch bank ING recently took a $13.4 billion cash injection from the Dutch government to boost its Tier-1 capital ratio. With the company canceling its dividend and expecting to report its first ever quarterly loss, confidence in the combination bank and insurance firm has waned.

Many investors agree with the government's finance minister that ING is a healthy financial institution, but not everyone agrees that the stock will be a solid performer. Only 93% of the 788 CAPS members rating ING expect it to beat the market.

Whole Foods
Integrating its recent acquisition of Wild Oats has been a challenge for Whole Foods, and associated costs have been weighing down earnings. But many investors consider the low stock price and expected long-term benefits of the combination a recipe for great returns. Bearish investors and analysts are skeptical of a company facing ongoing legal tussles surrounding both the Wild Oats acquisition and a highly competitive market. CAPS remains divided on Whole Foods, with 89% of the 4,105 members rating the company expecting it to beat the S&P.

Like many other U.S. companies, CapitalSource wants out of its residential-mortgage-related assets. The company also recently announced plans to abandon its real estate investment trust (REIT) status in 2009. CapitalSource slashed its dividend by 92% in September, and it expects to enter 2009 with lower leverage. It recently delayed a $273 million IPO for its health-care net lease business, which it sees as a valuable asset, and still looks forward for the right time to bring it to market. Many CAPS members remain bullish, though; nearly 96% of the 1,672 members rating CapitalSource give it the thumbs-up.

Ultimately, whether you believe a fall in any stock is warranted, your own research is more important than any collective opinions. But 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 120,000-plus members have covered in Motley Fool CAPS.

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Fool contributor Dave Mock habitually looks for silver linings in even the darkest clouds. He owns shares of CapitalSource, which is an Income Investor pick. Whole Foods Market and Apple are Stock Advisor selections. The Fool owns shares of CapitalSource. The Fool's disclosure policy is made of sugar and spice and everything nice.