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 toy maker RC2 dropped more than 32% Monday when Mattel's Fisher-Price signed a new, global license for HIT Entertainment's Thomas & Friends train product line, which could significantly cut revenue for RC2.

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 125,000 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 15% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than 3. If you want to run this screen for yourself, please do -- just keep in mind that the results will update with the market.

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


CAPS Rating
(out of 5)

Price Change




Weyerhaeuser (NYSE:WY)



Huntsman (NYSE:HUN)



Source: Motley Fool CAPS. Price return from Dec. 12 through Jan. 5.

MBIA has had some huge swings in share price over the past several months, as investors and institutions clash over just what the fate of the beaten-down financial insurer will be. Like rivals XL Capital and Ambac Financial (NYSE:ABK), MBIA sold guarantees on mortgage-backed securities and CDOs that caused large losses when the mortgage market went south. With investors unable to reliably value financial firms, it's no wonder so many are unsure just where the bottom may be, thus remaining bearish on firms like MBIA. In CAPS, slightly more than 50% of the 970 members rating MBIA expect it to outperform the market.

Weyerhaeuser joined the chorus of companies conserving cash recently, with the announcement that it would slash its dividend by more than half. The wood-products supplier also cut its capital expenditures for 2009 and imposed a wage freeze on its employees in an effort to deal with its deteriorating business segments. With the housing industry and homebuilders like Toll Brothers (NYSE:TOL) still in the dumps, shares of the company declined more than 50% in 2008, and demand continues to slump for lumber and paper products.

Weyerhaeuser got hit with a one-two punch last year -- in the first half of 2008, the industry was hit with rising energy costs, while the second half brought plummeting demand. With the company expecting fourth-quarter earnings to be worse than previously thought, Weyerhaeuser is a little short on love from the CAPS community, with only 77% of the 303 members rating it bullish.

Specialty chemical maker Huntsman had originally agreed to sell itself to Hexion Specialty Chemicals (a unit of private equity firm Apollo Management) for $28 a share back in July 2007, but the company's financials deteriorated significantly following the announcement, throwing the deal into limbo. Buyer Hexion eventually backed out of the deal and agreed to pay Huntsman $1 billion, which will boost the company’s balance sheet for 2009.

Huntsman joins a record number of botched deals in 2008, including BHP Billiton's dropped bid for Rio Tinto and Constellation Energy (NYSE:CEG) and Berkshire Hathaway (NYSE:BRK-B) subsidiary MidAmerican Energy’s broken deal. While some investors believe Huntsman got the short end of a billion-dollar stick, a solid contingent of CAPS members still see a good long-term outlook in the chemical maker. Today, more than 90% of the 232 CAPS members rating Huntsman expect it to outperform the market.

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 nearly 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.

The Motley Fool Inside Value service looks for solid companies with shares that have been beaten down irrationally. To see what companies the analyst team believes are priced way below intrinsic value today, 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. Berkshire Hathaway is an Inside Value selection and a Stock Advisor pick. RC2 is a Hidden Gems pick. The Fool owns shares of Berkshire Hathaway. The Fool's disclosure policy is made of sugar and spice and everything nice.