5 Stocks in a Tailspin

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, it didn't take long for Lehman Brothers (NYSE:LEH) shares to plunge 45% after the company and Korean investors ended talks on a potential deal to inject capital into the company.       

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 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:

Source: Motley Fool CAPS. Price return from Aug. 8 through Sept. 5.

Altair Nanotechnologies
Lithium-ion battery maker Altair is dipping closer to penny-land these days; the company is having trouble turning technology into profits. In its most recent quarter, revenue fell 38% and its net loss grew to $5.66 million. The company has also burned through almost half of its cash and equivalents during the first six months of the year, mostly to fund operations. Some investors still take a shine to Altair, though, hoping that its batteries will be the power behind the next generation of green cars. More than 86% of the 431 CAPS members rating Altair Nanotechnologies see it outperforming the market.

Ciena
Even though third-quarter earnings showed revenue growth of 24%, net income dropped and Ciena scared investors with a reduced revenue forecast for the fourth quarter. As customers like AT&T (NYSE:T) and Verizon pull back on capital expenditures, the networking equipment supplier is seeing its sales cycles extend. But some investors see a reasonable valuation on shares of Ciena considering its cash-generation capabilities, giving 84% of the 368 CAPS members rating the company enough reason to vote bullishly.

Healthways
Contract losses and renegotiations caused health-care support services provider Healthways to lower its fiscal first-quarter guidance recently, knocking the stock down more than 20% in one day. The drop follows several setbacks in managed care contracts already experienced by Healthways this year, making it difficult for investors to stomach the losses. Still, more than 94% of the 438 CAPS members rating Healthways expect it to recover more profitable growth and be a healthy market outperformer.

Chicago Bridge and Iron
A $317 million pre-tax charge pushed Chicago Bridge and Iron’s earnings down to a loss of $140.5 million for the recent quarter announced in July, and the stock has continued to show weakness since then. Though business prospects are bright, the company's extensive work with subcontractors and unions has been giving it fits. But a solid reputation has some investors looking at a buying opportunity, as its backlog has grown to $7.4 billion and several projects have been added. As such, more than 97% of the 1,108 CAPS members rating Chicago Bridge and Iron expect it to beat the S&P.

Gushan Environmental Energy
Some CAPS members think Chinese biodiesel fuel producer Gushan could be one of the solutions to China’s vexing pollution problems. But traffic control measures set for the Olympic Games in Beijing forced the company to suspend its Beijing operations temporarily. As a result, Beijing production is expected to drop by 10,000 tons, and overall production is anticipated to be lower this year by about 3%. Still, many investors like the company’s position in China and believe it could be a monster of a stock in the future. More than 96% of the 443 CAPS members rating Gushan Environmental Energy see it beating the market going forward.

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 5,500 stocks that 115,000-plus members have covered, in Motley Fool CAPS.