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 Medivation (Nasdaq: MDVN) lost two-thirds of their value after the company dropped the bomb that its Alzheimer's drug Dimebon fell well short of its clinical trial goals.

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 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 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 Feb. 12 through March 9.

VisionChina Media
In addition to a fourth-quarter year-over-year drop in earnings and revenue, VisionChina Media expects a rough start to this year. The company guided for first-quarter revenue far lower than Wall Street anticipated; the market promptly slashed one-third of VisionChina's value. The digital display advertising company saw a slight revenue uptick over the third quarter, but it expects that several issues -- including the integration of its recent Digital Media Group acquisition -- will cloud projections of its financial performance in the short term. The stock still holds a four-star rating in CAPS, nestled between five-star peer Focus Media (Nasdaq: FMCN) and three-star online media company SINA, with many investors still keeping a positive outlook. When comparing bulls to bears in CAPS, 92% of the 280 members rating VisionChina Media envision the stock beating the market.

Arena Resources
Despite a 28% increase in fourth-quarter revenue, oil and gas firm Arena Resources watched its quarterly earnings drop 32%, as total costs and operating expenses more than doubled in the quarter. The disappointing fourth-quarter results sparked a sell-off last week that erased about 25% of the company's value. While energy producer SandRidge Energy (NYSE: SD) is working through some of its own financial and operational issues to get shares headed back in the positive direction, Arena is dealing with production problems that have raised concerns among analysts and individual investors alike. But despite the current issues, many CAPS members like the company's debt-free balance sheet and long-term potential. Nearly 96% of the 538 CAPS members rating Arena Resources expect it to outperform the broader market.      

U.S. Natural Gas
Activity in the natural gas space has picked up in recent months, as companies race to get in on shale gas plays and position themselves for potentially higher future demand. Deals like ExxonMobil's big move to take down XTO Energy and Total's deal with Chesapeake Energy (NYSE: CHK) have changed the exploration landscape significantly. But the recent dealmaking hasn't overcome the decline in natural gas prices, nor the subsequent drop in shares of the U.S. Natural Gas ETF. Still, this hasn't deterred many investors from their bullish opinions on the long-term outlook for the commodity. CAPS members see potentially higher natural gas prices as the economy eventually recovers, and as more initiatives to use natural gas as a fuel source take hold. Overall, 96% of the 1,396 CAPS members rating the U.S. Natural Gas ETF believe it's a market-beating investment.

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.