3 Stocks in a Tailspin

Individual stocks can rise 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 Compellent Technologies fell 24% last Friday after the network storage company missed earnings expectations, despite a 35% jump in revenue.

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 offers 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 150,000 CAPS members to make better decisions.

We'll use CAPS' handy stock-screening tool to quickly zero in on companies with three factors: Their prices have fallen at least 15% in the past four weeks, and they have a market cap greater than $100 million and a beta of less than 3.

Source: Motley Fool CAPS. Price return Jan. 22 through Feb. 16.

Alcatel-Lucent
Wireless carrier AT&T (NYSE:T) recently handed major contracts to Alcatel-Lucent and LM Ericcson to supply equipment for its much-anticipated 4G network upgrade, which gave hope that Alcatel could benefit from improvement in its markets this year. But a quarterly report that showed a nearly 20% decline in revenue and a hazy outlook for its turnaround plan led to a hit to the company's shares. The company doesn't expect to return to annual profitability until 2011, and its outlook for this year didn't impress investors. With weak sentiment, CAPS members have given the company a two-star rating for several years now. When comparing bulls with bears, only 73% of the 542 CAPS members rating Alcatel-Lucent see it beating the market.                              

Boston Scientific
Medical device maker Boston Scientific has had little good news to share lately -- only the bad kind that has prompted investors to sell off shares. The company recently agreed to pay a costly settlement to Johnson & Johnson (NYSE:JNJ) to avoid litigation in the latest of many patent disputes that have also included rivals like Medtronic (NYSE:MDT). And recent reports questioning the safety of two of Boston Scientific's defibrillators have added to the uncertainty. With a weak earnings report and an outlook that includes a drawn-out restructuring, some investors are wary about Boston Scientific's turnaround. In CAPS, a lackluster 77% of the 790 members rating Boston Scientific expect it to outperform the market.

Sierra Wireless
Thanks in part to higher marketing expenses and increased research and development costs, Sierra Wireless reported a fourth-quarter net loss, missing analyst expectations on an adjusted basis. Yet despite the red ink on the bottom line, Sierra Wireless pulled in 8% revenue growth and looks for revenue growth in the first quarter as well. It recently unleashed new AirCard products with customers like AT&T, and is pushing into the mobile hot spot space ruled by rival Novatel Wireless' (NASDAQ:NVTL) MiFi device. With the growth of mobile computing and a strong balance sheet, many CAPS members aren't fazed by the recent drop and like the company's potential. So 93% of the 372 CAPS members rating Sierra Wireless are bullish.

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 nearly 5,400 stocks that 150,000-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.