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 Skilled Healthcare fell 75.6% last week when a California jury said it should pay $671 million for violating state law in operating nursing homes.

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 165,000 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 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 June 18 through July 13.

New Gold
Gold prices have been on the rise, helping producer New Gold generate a solid first quarter and giving it increased financial flexibility to work on its new projects. Its New Afton project is set to begin production in the second half of 2012 and its 70% joint venture partner Goldcorp (NYSE: GG) on its El Morro project has a target to begin construction in early 2011. One item of concern to investors, though, is the latest court decision regarding the company's environmental permit at its Cerro San Pedro mine in Mexico. The possibility of being forced to stop production again would be a sharp blow as the mine currently accounts for nearly 30% of New Gold's annual gold output. Many believe this adversity can be overcome, however, as roughly 89% of the 259 CAPS members rating New Gold see the stock beating the broader market.

Conn's
Competition in the electronics retail business has continued to be brutal, taking a toll on Conn's recently as the company reported a drop in first-quarter same-store sales of a whopping 19.8%. While peer Radio Shack (NYSE: RSH) reported a 4.7% rise in comps and 16% jump in profit and Best Buy (NYSE: BBY) squeezed out a 2.8% increase in comps and a slight 1.3% increase in earnings, Conn's saw its first-quarter earnings fall 51%. The company's CAPS rating stood at five stars at the end of last year, but has since trailed off to an average three stars. Still, about 94% of the 340 CAPS members rating Conn's see it as a market-beating investment.

Orthovita
Biological surgery products maker Orthovita has carried a top five-star rating in CAPS for much of the past year as members look for the company to benefit from an aging population and the increased need for repairing bone and tissue. The company reported an 11% jump in first-quarter sales as it made progress with selling its Cortoss synthetic biomaterial, and peer NuVasive (Nasdaq: NUVA) has seen adoption of its XLIF spinal technology increasing as well. But shares of both companies recently had their price targets slashed by a Canaccord Genuity analyst, who believes worsening pricing of spinal products could hurt the top lines of both companies and affect growth. Many disagree, though, as 96% of the 336 CAPS members rating Orthovita are still bullish.

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 165,000-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.