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, things were just starting to warm up for miniature display maker Microvision (NASDAQ:MVIS) before its shares fell 20% when it said it would sell additional shares of stock at a discount to the market price 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 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 145,000 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 Oct. 30 through Nov. 24.

True Religion
While some clothing retailers such as Buckle have been tearing through the recession, and others like Abercrombie & Fitch (NYSE:ANF) have struggled to adapt, high-end apparel maker True Religion has held up relatively well selling its high-priced jeans. But its third-quarter earnings missed analyst expectations, affected by higher expenses, and it received an analyst downgrade, causing investors to bid down shares. Still, the company generated higher revenue than last quarter and raised its 2009 profit guidance as it looks to roll out new products in other areas to keep stoking growth. In CAPS, 86% of the 487 members rating True Religion see the stock beating the broader market.

Cedar Fair
It hasn't been all fun and games for Cedar Fair lately -- investors hammered shares after the amusement-park operator announced poor quarterly results and said it expects to suspend its dividend next year. The company has seen less business in the weak economy, similar to Disney’s (NYSE:DIS) theme parks division, but Cedar Fair doesn’t have an empire of movie hits and cable networks to offset the declines. Although the company had more operating days in this year’s quarter compared with last, it still reported lower revenues and attendance, including lower group sales and season pass sales. At this point, a lackluster 81% of the 392 CAPS members rating Cedar Fair expect it to outperform the market.

FreightCar America
With no new orders for railcars coming in the third quarter, FreightCar America found itself in a tough situation. The company, which makes coal-carrying railcars for Warren Buffett’s new elephant -- Burlington Northern Santa Fe (NYSE:BNI) -- and other railway companies, reported a big drop in third-quarter railcar deliveries, with revenue that fell 77% from last year and net income that dropped 89% to $1.1 million. The company expects to reduce its workforce and be selective in its leasing business in order to keep a tight grip on its solid balance sheet. Despite the grim quarter, though, the company has no long-term debt and sits on more than $130 million in cash and short-term investments, a fact that likely plays into why 96% of the 853 CAPS members rating FreightCar America expect it to beat the S&P going forward.

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 145,000-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.