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 Exide Technologies (NASDAQ:XIDE) fell 23% last Wednesday after Wal-Mart said it will no longer sell its automotive batteries, which represents a significant portion of its Transportation Americas unit sales.

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 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 150,000 CAPS members to make better decisions.

We'll use CAPS' handy stock screening tool to quickly zero in on companies with three factors: their prices have fallen at least 25% in the last four weeks, and they have a market cap greater than $100 million and a beta of less than 3.

Source: Motley Fool CAPS. Price return Jan. 15 through Feb. 9.

Origin Agritech
Origin Agritech's shares doubled in a single day in November after receiving government approval of its genetically modified corn seed. And many investors were betting that the approval would help it further benefit from the growing Chinese agriculture market that is also fueling optimism in companies like China Green Agriculture (AMEX:CGA) and PotashCorp (NYSE:POT). But Origin's CAPS rating also tanked to one star from four, with some CAPS members skeptical of the stock's ability to continue to outperform. It recently followed up its fiscal 2009 loss with a report of a fiscal first-quarter loss and a decrease in sales of 31.5% for the quarter, leaving just 60% of the 448 CAPS members rating Origin Agritech bullish on its chances to outperform the broader market.

Palm
A majority of CAPS members are bearish on Palm's ability to compete in a wireless market that is becoming more fiercely competitive. While Google's Android more than doubled its share of the smartphone platform market to 5.2% in December and Apple's (NASDAQ:AAPL) iPhone reached 25%, Palm lost the most market share, dropping to 6.1%. Demand for its Pre smartphone with Sprint Nextel hasn't had the same intensity as other competitors' phones, and its recent release of the Pre and Pixi with Verizon have yet to hit it out of the park. In CAPS, only a lowly 45% of the 1,466 members rating Palm expect it to beat the market average return.

Curis
Shares of drug developer Curis took a big dive early this year as it announced it was issuing more shares to raise capital, but following the big fall investors following the firm in CAPS have bumped the stock's rating back up to five stars, where it stood for much of last year. Despite a high level of volatility that can be associated with development stage drug companies, investors see promise in its pipeline of cancer drugs, like GDC-0449, and are bullish about the partnership it's created with big pharma like Roche's Genentech. Today, 96% of the 102 CAPS members rating Curis anticipate market-beating returns ahead.

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 150,000-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.