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, a government bailout still doesn't give investors confidence in GM, whose shares dropped 21% on Monday and almost 15% more on Tuesday, following a ratings downgrade by S&P.

Big share-price drops 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 125,000 CAPS members to make better decisions.

We've used CAPS' handy stock-screening tool to quickly zero in on companies that have been slashed by at least 20% in the past four weeks and have a market cap greater than $100 million and a beta of less than 3. If you want to run this screen yourself, help yourself -- just keep in mind that the results will update with the market.

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

Company

CAPS Rating
(out of 5)

4-Week
Price Change

KeyCorp (NYSE:KEY)

*

(20.4%)

Fifth Third (NASDAQ:FITB)

*

(20.0%)

Mechel (NYSE:MTL)

****

(32.2%)

Activision Blizzard (NASDAQ:ATVI)

*****

(22.7%)

Noble (NYSE:NE)

*****

(22.3%)

Source: Motley Fool CAPS. Price return from Nov. 28 through Dec. 22

KeyCorp
Investors found out the hard way that regional bank KeyCorp's high dividend yield was too good to be true. It recently cut its dividend for the second time in five months, and investors have given their opinion of the move by selling shares. With the second cut, investors are growing more concerned about the company's high exposure to the commercial real estate market as the full-blown debt crisis continues to spread. As such, only 55% of the 378 CAPS members rating KeyCorp expect it to outperform the market.

Fifth Third Bancorp
Financial-services company Fifth Third has fallen a long way from its 52-week high, as more of the bank's borrowers default on their residential mortgage loans and real estate developer loans. CEO Kevin T. Kabat recently said the company does not expect improvement in the near term and joined many other banks by cutting its dividend to save more than $300 million a year. At this point, only 50% of the 702 CAPS members rating Fifth Third see the stock as a market-beating investment.

Mechel
Russian steelmaker Mechel posted a strong first nine months of this year, with revenue up 84.7% from the same time last year. But the global crisis has cut Mechel's coking coal sales significantly, and the company responded with plans to cut steel production by 20% to 25% in 2009. And some analysts see continued depressed demand for steel, coal, and other commodities. With a lower stock price, though, more than 97% of the 1,391 CAPS members rating Mechel see value in the shares and are bullish today.

Activision Blizzard
While peer game company Electronic Arts (NASDAQ:ERTS) has been throwing around profit warnings, Activision Blizzard has been enjoying the success of its hit video games, including Guitar Hero and World of Warcraft, of which the expansion version became the fastest-selling PC game of all time after its November release. Some investors see the slide in share prices as a good opportunity to buy, and more than 98% of 3,072 CAPS members rating Activision Blizzard today expect it to outperform the S&P.

Noble
Oil prices have plummeted, but drilling-service provider Noble has a strong balance sheet and backlog and still holds a positive outlook for next year. With Noble's decline in share price this year, its price-to-earnings ratio is far below its five-year average. And it's looking to gain some advantages by joining Weatherford (NYSE:WFT) and many other companies in the hot new tax haven of Switzerland. With a strong long-term outlook, Noble has 99% of the 1,746 CAPS members rating it being bullish.

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 125,000-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.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. 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. Electronic Arts and Activision Blizzard are Stock Advisor selections. The Fool's disclosure policy is made of sugar and spice and everything nice.