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 soft-drink maker Cott fell nearly 27% on Monday after the company cut its full-year earnings outlook. 

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 15% in the past 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 July 2 through July 28.

CardioNet
While putting in one of the best new issue showings in 2008, shares of CardioNet are now trading well below last year's IPO price after the company recently withdrew its 2009 outlook and Pennsylvania Medicare carrier Highmark cut the reimbursement rate for CardioNet's cardiac monitoring services. The revision will likely put pressure on the company's revenue, which is strongly tied to rates it collects from health management organizations covering some of the cost for the implantation of its devices. Revenue from its MCOT system had grown to 88% of total revenue in the first quarter, and total revenue had increased by 40% over last year.

The stock price collapse isn't the only thing reflecting the evaporation of expected growth -- only 84% of the 151 CAPS members rating CardioNet today expect it to outperform the market.

Hansen Medical
While Intuitive Surgical (NASDAQ:ISRG) smashed revenue and earnings estimates for its recent quarter, and medical-device maker Boston Scientific (NYSE:BSX) also beat Wall Street forecasts, Hansen Medical recently estimated that its second-quarter revenue will fall well short of analyst expectations. Apparently, economic troubles have caused several customers to delay orders and reassess financing for its Sensei Robotic Catheter systems. On top of this, the company will face a challenge collecting the $36 million it was awarded in a suit against Luna Innovations, as Luna filed for Chapter 11 bankruptcy protection and is seeking to have the damages reduced significantly.

Despite all the gloom and doom, though, 95% of the 522 CAPS members rating Hansen Medical expect it to outperform the market.

Allegheny Technologies
Similar to steel producer AK Steel (NYSE:AKS), specialty metals producer Allegheny posted a loss for the second quarter, hurt by weak demand from the automotive and aerospace industries. Its revenue was cut in half to $710 million from $1.46 billion, and most of its segments felt pressure. It also expects a tough third quarter, with challenging pricing, in an environment that has seen other companies like Nucor (NYSE:NUE) slash production since last year.

Despite the turmoil in the steel and metals sector, though, 95% of the 1,182 CAPS members rating Allegheny Technologies are still bullish.

Ultimately, whether 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.