3 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, shares of jewelry retailer Zale fell 24% on Monday after reporting an ugly same-store sales decline of 18.6%.

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. 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 145,000 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 20% 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.

Source: Motley Fool CAPS. Price return Nov. 13 through Dec. 9.

Royal Bank of Scotland
While the Dubai World fallout isn't expected to break domestic banks such as Bank of America (NYSE:BAC) or JPMorgan Chase, British banks like Royal Bank of Scotland and HSBC are among the entity's biggest creditors, with Royal Bank of Scotland having up to $2 billion in exposure. The bank has also been undergoing a massive restructuring this year, and after the decision to take part in a state insurance plan to limit exposure to big impairment losses, the U.K. government's ownership of the company is expected to increase.

In CAPS, the stock has maintained a lackluster two-star rank, with 83.6% of the 464 members rating Royal Bank of Scotland expecting it to outperform the market.

Take-Two Interactive Software
The holidays aren't expected to be as merry as usual for video game publisher Take-Two, after the company gave a weak outlook that prompted investors to wipe out nearly a third of the company's value in just a day. The company said it's expecting losses in the fiscal first and fourth quarters, as well as a loss in fiscal 2010, as it hasn't pulled in strong sales on its Major League Baseball titles. While competitor Activision Blizzard (NASDAQ:ATVI) recently received one analyst's bullish nod, Take-Two suffered multiple downgrades after the news.

But a strong contingent of CAPS members think the company will eventually recover; 92.6% of the 1,141 members rating Take-Two Interactive Software expect it to beat the broader market going forward.

Jacobs Engineering
Weak spending on refinery projects in North America has taken its toll on Jacobs Engineering's fiscal fourth-quarter earnings and its outlook for next year. Investors pummeled shares after the construction services company forecast lower-than-expected 2010 earnings, also noting that its backlog took a hit from cancellations.

Recent earnings reports from peers Fluor (NYSE:FLR) and Foster Wheeler (NASDAQ:FWLT) also reflected a weaker environment, yet thanks to the company's strong growth history, diversified base of customers, and solid cash-generating abilities, many CAPS members remain bullish. As such, 97% of the 1,088 CAPS members rating Jacobs Engineering give the stock a thumbs-up.

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 145,000-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.