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 in Citigroup (NYSE:C) dropped nearly 20% on Monday, after the megabank and peer Bank of America reported increasing credit losses under the guise of earnings.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks in synch 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 its results will update with the market.

Source: Motley Fool CAPS. Price return March 27 through April 21.

Lennar
Even though the U.S. is now several quarters into a homebuilding correction, the housing market has continued to show weak trends that weigh on homebuilders like Lennar. The company recently reported that home deliveries, average home selling prices, and new orders all declined in its fiscal first quarter. As a result, the company posted a $155.9 million loss, including charges for land and inventory values. 

Although Pulte (NYSE:PHM) may have visions of a recovery on the horizon, many investors aren't convinced the rough ride is over yet. A significant population of CAPS members foresee many obstacles opposing Lennar's efforts to revive sales and pay off its debt. At this stage, only 34% of the 1,163 CAPS members rating Lennar expect it to beat the market, with almost two-thirds still betting that the stock will underperform.

Apollo Group
Apollo Group runs the University of Phoenix campuses nationwide, and unlike most other stocks, it's seen big gains in share price over the past year. The for-profit educator is benefiting from more students in search of education. It recently reported that new student enrollment was up 23% in its fiscal second quarter, helping it blow away analysts' earnings expectations.

But shares took a hit after the company warned of increasing bad debt expenses, as collecting on receivables from students with less cash on hand grows ever more difficult. And profit margins are getting squeezed as Apollo diverts more money into staffing and marketing. Many CAPS members have turned bearish on the stock in the past few months, plunging its rating from three stars to a bottom-feeding one-star rank. A high amount of insider selling, questions about valuation, and the threat of lawsuits all fuel the stock's increasingly negative image. Analysts continue to spar over Apollo's fate, but a considerable 21% of the 745 members rating Apollo Group in CAPS give the stock the thumbs-down.

KeyCorp
Some big banks such as Wells Fargo (NYSE:WFC) are posting legitimately strong earnings. But others, including Bank of America and Citigroup, only appear profitable on the surface, with potential trouble still lurking underneath. Earnings from regional banks have landed somewhere between those two extremes; KeyCorp joined peers such as Huntington Bancshares (NASDAQ:HBAN) and Zions in reporting first-quarter losses this week.

With KeyCorp, the usual culprit's to blame: Higher credit costs led to a loss of $488 million in the quarter. A couple of Wall Street analysts also took the opportunity to downgrade the stock, citing a weaker outlook than they'd previously thought. Further rubbing salt into investors' wounds, KeyCorp announced a dividend cut to just a penny per share, putting the bank in company with many others whose dividends are almost dead. Another bottom-rung one-star stock in CAPS, KeyCorp only earns thumbs-up from 56% of the 410 members rating it.

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 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.