Individual stocks can rise 10%, 25%, or even higher in a short period of time. And they can fall just as far, just as quickly. For example, shares in mortgage insurer PMI Group (NYSE:PMI) fell 22% on Friday after the company posted a wider-than-expected loss.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks along with the larger pessimism facing the market today. 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 offers 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 135,000 CAPS members to make better decisions.

We'll use CAPS' handy stock screening tool to quickly zero in on companies whose share prices have fallen at least 20% in the past four weeks, and that 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.


CAPS Rating
(out of five)

Price Change

Sprint Nextel (NYSE:S)



MetroPCS Communications (NYSE:PCS)






Source: Motley Fool CAPS. Price return July 17 through Aug. 11.

Sprint Nextel and MetroPCS
While Apple (NASDAQ:AAPL) sold more than 1 million of its new iPhone 3G Ses in its first weekend of sales in mid-June, locking many premium subscribers into AT&T (NYSE:T) contracts, Sprint Nextel's silence regarding the release of the Palm (NASDAQ:PALM) Pre on June 6 has some investors concerned about its potential to become a blockbuster. Some analysts estimate that the Pre will sell just 300,000 to 500,000 units in its first three months, short of the lofty expectations formed after impressive reviews of the phone. In addition, Sprint Nextel reported a wider loss of $384 million and said it lost close to 1 million post-paid wireless subscribers during the second quarter, proving that the retreat of premium subscribers is not over yet.   

Focusing on a positive aspect of its operations, Sprint Nextel noted that it added 777,000 prepaid users, helped by its Boost Mobile service, which includes unlimited calls and texting for a set monthly rate. The company then announced that it would buy prepaid specialist Virgin Mobile USA, but because the prepaid segment tends to be less profitable and less predictable than the post-paid subscription business, not many investors are drooling over the prospects for profitable growth here.

Some investors and analysts are citing rising competition from services like Boost Mobile as one of the reasons why MetroPCS's number of net new customer additions in the second quarter was disappointing -- only one-third of what it had added in the first quarter. Its second-quarter profit fell 48%, while its churn grew to 5.8% from 5% in the first quarter, compared with much lower turnover rates at companies like AT&T or Verizon, which lock in customers with annual contracts.

As long as contract subscribers continue to flee, investors likely will continue to overlook any prepaid success at Sprint Nextel. In CAPS, only 77% of the 1,671 members rating Sprint Nextel expect it to outperform the market. MetroPCS gets a little bit more love in CAPS, though, with 90% of the 188 members rating it expecting it to outshine the market.

USEC reported a 60% jump in second-quarter earnings because of higher sales of enriched uranium to nuclear power operators, but was dealt a heavy blow when it yanked its 2009 earnings guidance. The change came after the Department of Energy asked USEC to pull a loan request for its American Centrifuge Plant in Ohio. The company has already invested $1.5 billion in the project, but still needs an additional $2 billion. Consequently, USEC will incur costs for employee layoffs and won't get a review of its application by the DOE until certain technological and financial goals have been met. But despite the major setback, 96% of the 1,314 CAPS members rating USEC still expect it to beat the broader 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 other 5,300 stocks that 135,000-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.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 43 percentage points on average, take a free 30-day trial.

Apple is a Stock Advisor recommendation. Sprint Nextel is an Inside Value recommendation. Fool contributor Dave Mock habitually looks for silver linings in even the darkest of clouds. He doesn't own shares of the companies mentioned above. The Fool's disclosure policy is made of sugar and spice and everything nice.