3 Stocks in a Tailspin

Individual stocks can surge by 10%, 25%, or even more in a short time. And they can fall just as far, just as quickly. For example, shares of United Airlines parent UAL (NASDAQ:UAUA) fell by 21% one day last week, when it announced that, like several of its competitors, it would dilute shares to raise more money.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks that go along with the larger pessimism facing the market today. Fortunately, we have Motley Fool CAPS, a great resource to help us understand the bigger 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 140,000 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 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 from Sept.11 through Oct. 7.

Eastman Kodak
Film maker Eastman Kodak has been in a long downward spiral for more than a decade now, and the latest move to refinance debt hasn't helped investors' confidence about the future. The company plans to buy back some debt and issue notes, convertible notes, and warrants to Kohlberg Kravis Roberts and other institutional buyers that will potentially dilute shares by up to a whopping 40%. Kodak has struggled with its inkjet printer business, and the company reported a $189 million second-quarter loss in July as the recession hurt demand for its products. Also, many investors are concerned about the company's growth strategy going forward, with just 56.4% of the 559 CAPS members who rate Eastman Kodak expecting it to outperform the market.

MannKind
MannKind has a lot riding on the FDA's approval and the medical community's acceptance of its inhaled insulin device,\ Afresa. Eli Lilly (NYSE:LLY) and Novo Nordisk dropped their inhaled-insulin programs a couple of years ago, but MannKind has high hopes for Afresa's success, and the company anticipates an FDA decision early next year. The company had previously anticipated signing a marketing partnership deal by year's end, but shares lost almost a third of their value when it said it didn't expect to sign a deal until Afresa gets approved. Many investors are concerned with the possibility of a delayed decision from the FDA and the company's ability to quickly find a marketing partner. As such, only 73.1% of the 431 CAPS members rating MannKind are bullish today.

Arena Pharmaceuticals
Arena has continued to take investors on a volatile ride lately as share prices have reacted throughout the year to new developments with the company's obesity treatment, lorcaserin. The latest dip came after Arena released results that met its goals in a late-stage study but didn't measure up to the effectiveness shown by data from rival candidates VIVUS (NASDAQ:VVUS) and Orexigen Therapeutics (NASDAQ:OREX). The potential for obesity drug sales is huge, and competition is heating up as Arena and Vivus look to apply for approval by the end of this year. With a big carrot still dangling in front of Arena, 94.5% of the 495 CAPS members rating the drugmaker see it beating 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 140,000-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.