5 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 in Huntington Bancshares dropped nearly 30% on Monday due to more worries that the company is behind the eight-ball and won't have sufficient capital to cover mounting credit losses.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're just knee-jerk reactions from panicky investors. 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 125,000 CAPS members to make better decisions.

We've used CAPS' handy stock screening tool to quickly zero in on companies with share prices down at least 30% 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 your results may be different as the market changes.

Source: Motley Fool CAPS. Price return from Jan. 9 through Feb. 3.

AMR
Airlines just aren't getting much love these days. Little wonder, as AMR, parent of American Airlines, recently reported a $340 million quarterly loss, while competitor UAL (NASDAQ:UAUA) reported much worse from its United Airlines. Many carriers reported weaker traffic in January and in some cases couldn't manage to reduce seat capacity fast enough to match falling passenger demand. With the sky continuing to fall on commercial airline operators, only 57% of the 844 CAPS members rating AMR think it will outperform the market.

MGM Mirage
The casino industry isn't doing much better: Operators such as MGM and Las Vegas Sands (NYSE:LVS) have plummeted more than 90% in value in the past year. Many in the industry are now hamstrung with debt that was feverishly taken on in the last several years for expansion. MGM's free cash flow hasn't been flowing so freely either, and it holds in excess of $13 billion in long-term debt.

Moody's recently downgraded MGM's credit rating, expressing doubt that its current credit facility is sufficient to cover maturing bond debt in 2010. The discouraging outlook has only 79% of the 765 CAPS members rating MGM Mirage bullish these days.

Wynn Resorts
Growth of regional casinos also doesn't bode well for those with large operations in Las Vegas. Still, Wynn Resorts is better positioned than peers like Las Vegas Sands, and has more than $1 billion of cash and about $375 million in debt coming due in the next two years. Nevertheless, a bleak near-term outlook keeps it out of the value bin.

The company is also moving to save costs by cutting salaries and 401(k) matching, but CAPS investors still aren't thrilled, as only 77% of the 800 rating Wynn Resorts think it will beat the S&P.

Caterpillar
Heavy equipment maker Caterpillar shocked the market with a massive 20,000-job layoff plan that came along with its 28% drop in fourth-quarter earnings, but it wasn't done yet. The company then followed up with another 2,100 layoffs at its Illinois plants. Some CAPS investors believe that increased infrastructure spending will help the company recover from the downturn in mining and oil sectors, and 95% of the 4,508 CAPS members rating Caterpillar overall expect it to outperform the market.

Manitowoc
The global slowdown is finally becoming obvious in the heavy equipment manufacturing sector. Despite sales rising 16% in the fourth quarter, Manitowoc saw its bottom line bleed red ink due to its acquisition of Enodis and other charges. A 34% reduction in backlog in its crane segment from the year-ago period has also led the company to cut 22% of its workforce in the segment. Still, most CAPS investors see a bright future, as nearly 98% of the 1,590 members rating Manitowoc expect it to beat the 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 nearly 5,400 stocks that 125,000-plus members have covered in Motley Fool CAPS.

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