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, after jumping 79% recently on a potential acquisition offer from IBM, Sun Microsystems (NASDAQ:JAVA) shares dropped 22.5% Monday on news the deal was falling apart.

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 130,000 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 15% 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 March 13 through April 7.

GM
Unlike Ford (NYSE:F), GM and Chrysler have been operating on billions in government loans since the start of this year. The U.S. government gave GM until June 1 to complete a reorganization plan or face bankruptcy, and the company is under pressure to cut its unsecured debt. Recently, rumors have swirled that the company is already making preparations for a possible bankruptcy, which could help free the automaker from some of its suffocating debt.

The Obama administration has already demanded CEO Rick Wagoner's head, and many investors think the government has little inclination to write more bailout checks. While GM is working quickly with the U.S. Treasury to provide funds to its struggling parts suppliers, which are a critical part of the industry, many investors consider the effort futile. Only 42% of the 5,152 CAPS members rating GM expect it to outperform the market.

DRDGOLD
Shares in South African gold miner DRDGOLD, and other miners such as Canadian Agnico-Eagle Mines (NYSE:AEM), have had a big run since their lows last year. But recently, investors have shown no reluctance to unload shares of DRDGOLD, with a drop in production and job cuts overshadowing a large leap in operating profit in its most recent quarter. The company plans to remain cautious about investing in its business amid the current tight credit environment. CAPS investors remain cautious about an investment in DRDGOLD as well. Roughly 87% of the 145 members rating DRDGOLD expect it to beat the broader market.

American Railcar Industries
Rail haulers such as Norfolk Southern, Canadian National Railway, and Burlington Northern Santa Fe (NYSE:BNI) have all reported solid financials recently. Car manufacturer and servicer American Railcar reported that railcar shipments reached the highest level in the manufacturer's history in 2008, helping the company achieve record revenue.

But according to the Association of American Railroads, railcar freight traffic was down year over year in the first couple of months of 2009. The weak economy and tight credit markets have dogged the industry. New railcar orders have dropped, and industry backlog sits at its lowest level since 2003. American Railcar expects a very competitive environment over the next two years, and it doesn't expect its industry to recover until 2010. Yet nearly 90% of the 233 CAPS members rating American Railcar Industries still believe the stock will outperform the averages.

Ultimately, whether or not you believe a fall in any stock is warranted, your own research matters more 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 more than 5,300 stocks that 130,000-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.