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 Valero (NYSE:VLO) fell nearly 18% on Wednesday when it delivered a one-two punch by reducing its second-quarter guidance and committing to sell more shares.

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 135,000 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 20% 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 May 8 through June 4.

Fortress Investment Group
Stock in Fortress has had a nice run this spring, but it has been pulling back recently after the firm posted a 10% decrease in total managed assets from last year to $26.5 billion and a 39% drop in revenue. Like private equity peer Blackstone Group (NYSE:BX), the company reported a narrower loss -- $67 million compared to last year. Fortress has experienced a lack of new investment interest, and a high number of client redemptions have also been dragging on results as many clients have steered away from hedge funds. To top it off, Fortress has also priced a secondary offering to raise more money. Despite the many benefits private equity firms may hold, only 62.7% of the 453 members rating Fortress Investment Group in CAPS expect the stock to outperform the S&P.

GT Solar
As a major supplier to the solar industry, GT Solar has been feeling a little of its customers' pain lately as tighter credit has been crippling solar sales and forcing production furloughs. While still delivering healthy profits, GT Solar posted a 59% drop in earnings in its fiscal fourth quarter as costs rose higher and sales fell by 33% from the previous quarter. Like Applied Materials (NASDAQ:AMAT), the company had a sequential drop in backlog, and GT forecasts weaker revenue and earnings in fiscal 2010. With all the pressures currently facing the solar market, many CAPS members are weary of an investment in GT Solar, with only 81% of the 224 members rating GT Solar bullish today.

iStar Financial
General Growth Properties' bankruptcy and Simon Property Group's (NYSE:SPG) struggle with high debt illustrate the pressures in the commercial real estate credit markets. As a custom-tailored commercial real estate finance provider, iStar Financial is doing its best to navigate a tough climate, but like many other financial firms, the company has had to increase its loan loss provisions. It reported 32.6% of its total managed loans on non-performing loan status in its most recent quarter, and decreasing interest income from increasing non-performing loans played its part in dragging down revenue.

However, its improved liquidity position -- one that now includes $1 billion of capacity -- has some CAPS members believing that iStar is positioned well to ride out the storm. And with its REIT status, some members look forward to possibly generous dividends if and when the company returns to profitability. At this point, 88.6% of the 335 CAPS members rating iStar Financial expect it to beat the broader 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 5,300 stocks that 135,000-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.