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 Liz Claiborne (NYSE:LIZ) lost more than a quarter of their value one day recently when the company forecast a second-quarter loss that was wider than previously expected.

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 29 through June 26.

CIT Group
Commercial finance and leasing provider CIT Group has already suspended its dividend to conserve cash, but it's been little solace to investors, as the firm reported a widened quarterly loss of $504.5 million. The company has yet to be approved for U.S. government funds after converting to a bank holding company, and Standard & Poor’s is uncertain as to how much it might benefit if it does. Both Fitch and S&P recently downgraded CIT’s credit ratings due to concerns about the company’s liquidity and ability to repay debt, and S&P said further cuts to the highly leveraged firm may be possible. At this point, a rather lackluster 72% of the 555 CAPS members rating CIT Group see the company's stock outperforming the market in the future.

Tenet Healthcare
Tenet Healthcare recently lowered its 2009 net operating revenue guidance from previous forecasts as it predicts lower patient admissions. And some CAPS members share Jim Cramer’s latest bearish view on Tenet Healthcare and think it may be adversely affected by government health-care changes. Putting further pressure on shares that remain well below their annual high was Moody's downgrade of a sizeable chunk of the company’s debt to a lower junk status. Still, at today's prices, a total of 79% of the 286 CAPS members rating Tenet Healthcare expect it to beat the market.

ATP Oil & Gas
ATP recently joined other energy companies like Valero, Stone Energy (NYSE:SGY), and McMoRan Exploration (NYSE:MMR) in diluting shares with a follow-on offering of 8.75 million common shares. The move follows several other money raising efforts, including its partnership with GE (NYSE:GE) and a deal with Diamond Offshore. The company said the $68.1 million will be used to support drilling and development activities, including development of wells at its Telemark Hub. Despite the dilution and debt load, many CAPS members remain bullish on ATP with 95% of the 570 of members rating ATP Oil & Gas still giving the exploration company the thumbs-up.

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.