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 of teen-apparel retailer Aeropostale (NYSE:ARO) fell 11% one day this month after reporting a lower-than-expected November sales comparison and a disappointing outlook, despite its strength among peers.

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. 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 25% 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 Nov. 20 through Dec. 15.

Protalix
Some investors may have been hoping for biotech Protalix to be acquired. Instead, they'll have to settle for the company selling the rights to its Gaucher disease drug, in a deal that some consider a steal for Pfizer (NYSE:PFE). Protalix gets $60 million up front, plus additional potential milestone payments, while Pfizer gets 60% of the worldwide rights outside of Protalix's home country of Israel, which Teva Pharmaceutical (NASDAQ:TEVA) also calls home.

Some investors think the deal validates Protalix's plant-cell technology, but CAPS members aren't too certain of its future, giving the company a lowly one-star rating. Just shy of 50% of the 169 CAPS members rating Protalix expect it to outperform the market.

Lloyds Banking
The U.K. government owns about 43% of Lloyds Banking, and Lloyds intends to avoid handing over more by not participating in a government-backed asset insurance plan, unlike Royal Bank of Scotland. To do so, Lloyds completed the U.K.'s largest ever rights issue for about $22 billion, topping HSBC's rights issue in March. The issue came at a steep discount to Lloyds' trading price, but some investors like its move to shun additional government control, and foresee long-term potential with the bank.

In CAPS, 93.7% of the 844 members rating Lloyds Banking believe it will beat the broader market.

WSP Holdings
China-based WSP, which makes products for the oil industry, recently posted its first-ever quarterly loss. The global recession and lower demand for its products hurt WSP, much like the ding U.S. Steel (NYSE:X) showed in its tubular segment. U.S. and China trade disputes also caused excess supply in WSP's domestic markets, which helped lead to lower selling prices.

Despite its struggles, though, many CAPS members remain bullish on its future. WSP has a strong domestic position and is growing its international customer base. Today, 96% of the 395 CAPS members rating WSP Holdings are 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 5,400 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.