3 Stocks in a Tailspin

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, investors tossed out shares of online nutritional supplement retailer Vitacost.com last Wednesday and the stock fell 24% after the company reduced its first-quarter and full-year earnings and revenue guidance. 

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks or overreactions to fixable issues. 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 160,000 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 15% in the past 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 April 1 through April 27.

AMR
American Airlines parent AMR had experienced some improvement in its share price until recently, when the airline posted a crushing first-quarter loss of $505 million, dragging the whole sector down with it. While other airlines are looking at consolidation as a possible lifeline and Delta (NYSE: DAL) expects to return to profits in the second quarter, AMR says it's far from its goal of sustained profits. Analysts forecast full-year profits for other major airlines, but see AMR remaining in the red. With rising fuel costs and a continued softness in demand, many CAPS members are flying clear of the airline sector. Just 60% of the 903 CAPS members rating AMR see it as a market-beating investment.

Massey Energy
The horrific accident at Massey's Upper Big Branch Mine in Montcoal, W.Va., once again highlighted the perils of mining and the susceptibility of investments in the space. After the accident, shares of some peer miners like Alpha Natural Resources and Patriot Coal (NYSE: PCX) actually rose, as fears about a pinch in production of metallurgical coal made its way through the market. Patriot Coal has also benefited from an upgrade from a Citigroup analyst, partly because of its perceived strength in demand for met coal. Massey investors had been enjoying a nice upward trend as demand for coal and steel looked brighter on the international stage, but now the discussion is more about the company's safety record. Despite the setback, 90% of the 701 CAPS members rating Massey Energy still expect the stock to outperform the market.

Nokia
While Google (Nasdaq: GOOG) Android has become a fast-growing smartphone platform and iPhone shipments more than doubled in the latest quarter, Nokia's first-quarter shipments disappointed analysts as the company squares off against increased competition at the high and the low end. Nokia has high aspirations for its new MeeGo platform, which it co-developed with Intel (Nasdaq: INTC), but delays of its Symbian upgrade, lower average selling prices, and a weaker outlook for its operating margin are what's being piped into the market right now -- and investors don't like what they hear. In CAPS, 92% of the 2,683 members rating Nokia still see it beating 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 5,400 stocks that 160,000-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.