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 JDS Uniphase fell 20% a week ago last Thursday amid a wacky market sell-off but also fueled by a quarterly earnings report that left analysts and investors unsure of projected demand for products.

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 160,000 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 last 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 April 16 through May 14.

New York Times
Newspaper ad revenue is still falling, with Gannett (NYSE: GCI) posting an 8% drop and New York Times a 6.1% drop in the first quarter, but the declines have been easing with New York Times seeing its smallest decline since 2007. But even the "better than it's been in a long time" argument hasn't been enough to shift the highly bearish sentiment toward New York Times by CAPS member. Despite its better-than-expected earnings this quarter, the launch of the Wall Street Journal's New York section is expected to ratchet up competition and potentially take ads from The Times' key reader base. With many challenges still facing media companies, many CAPS members have chosen to remain on the sidelines as only 37% of the 401 members rating New York Times think its stock will outperform the broader market.

Transocean
There's still much unfolding with the ongoing investigation over the explosion and ensuing oil spill from the Deepwater Horizon, but Transocean -- along with BP (NYSE: BP) and Halliburton (NYSE: HAL) -- has already faced an intense grilling from Washington lawmakers this past Tuesday. While BP is expected to shoulder the bulk of the liability claims and cleanup costs of the accident, Transocean is expected to be on the hook for a significant share of the costs as well as the impact from the $590 million backlog on the sunken rig. The company could also see significant impacts to its existing and future business by potential changes in regulations in the U.S. Despite the remaining uncertainties, the company indicated optimism for demand for its rigs in its quarterly conference call and still maintains strong support in CAPS with 97% of the 5,623 members rating Transocean bullish on its chances to outperform the S&P.  

Alvarion
The stock in small-cap telecom equipment maker Alvarion took a heavy blow recently as the slower than expected spending on global WiMax technology has caught up with the company's financials. Major wireless carriers like Verizon (NYSE: VZ) have opted for the long-term evolution (LTE) platform for their next generation technology and more global providers are taking the same road leading away from WiMax, translating into falling revenue for Alvarion. The company warned of another possible sequential decline in revenue in the second quarter, and was forced to slash its workforce to cut costs. While Alvarion hasn't lost its five-star rating, there are those who question the future of WiMax. Most CAPS members are undeterred in their bullish outlook for the company, with some looking for a pickup in demand as the company works to secure more projects that include end-to-end services. In CAPS, 97% of the 980 members rating Alvarion see it as a market-beating investment.

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 5,400 stocks that 160,000-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.