3 Stocks in a Tailspin

Stock prices can rise 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 Regions Financial (NYSE:RF) fell 16% one day last week after the company announced plans to sell more common and mandatory convertible preferred stock as atonement because it failed the government's stress test.

Big drops in share prices 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 includes 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 whose prices have fallen by at least 20% in the past four weeks and that 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 May 1 through May 26.

American Apparel
A few retailers have been able to dodge the macroeconomic bullet, but American Apparel is not among them. Similar to American Eagle Outfitters and Abercrombie & Fitch (NYSE:ANF), the clothing manufacturer and retailer is feeling less love, as it posted a $9 million loss for the first quarter, with same-store sales falling 7%. American Apparel also cut its full-year forecast while retail sales numbers reported by the Commerce Department continue to come in worse than expected, falling in April for the second straight month. Like its peers, American Apparel is trying to figure out ways to lure customers without dropping prices so low that it kills margins or hurts the brand. At this point, a good portion of CAPS investors are hedging on the stock, with only 86.3% of the 270 members rating the company expecting it to outperform the market.

Harley-Davidson
So have you been having second thoughts about picking out that new Harley lately? So have many other would-be customers. As a premium-priced discretionary item, new Hogs are moving more slowly these days. As such, Harley-Davidson reported a 12% drop in sales and a 37% drop in per-share profit for its first quarter. The company did make progress in cutting inventories of unsold bikes, though, selling 4% more units than last year.

The company is doing a lot to adjust to the downturn, including cutting costs and turning over many of its top executives. It's also considering closing its main production facility in Pennsylvania amid plans to cut 1,400 to 1,500 jobs over the next two years. And like Ford and Honda (NYSE:HMC), it's participating in the government TALF (Term Asset-Backed Securities Loan Facility) program to improve lending in its finance unit. In CAPS, 80.3% of the 1,795 members rating Harley see it beating the market.

Smith & Wesson
While the increase in sales in stun-gun maker TASER International's (NASDAQ:TASR) most recent quarter is a result of increased international shipments, firearms makers Smith & Wesson and peer Sturm, Ruger have experienced soaring domestic sales that some investors attribute in part to fears about gun laws changing. Shares in Smith & Wesson have pulled back after more than tripling from the start of the year, but the rise has given the company the opportunity to raise money by issuing new shares, even though it will increase the number of shares outstanding by about 11%. At this point, 92.2% of the 731 CAPS members rating Smith & Wesson remain bullish.

Ultimately, whether or not you believe a fall in any stock price 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 5,200 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.