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 Barnes & Noble fell 19% on Tuesday after it gave a weak outlook amid increasing competition, particularly in the digital delivery segment where it is planning to spend 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. 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 165,000 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 June 4 through July 1.

Fortress Investment Group
Despite an uptick in revenue and management fees in the first quarter, the market has recently gone sour on Fortress Investment Group after the alternative asset manager posted a wider quarterly loss and announced that, once again, it will not pay a quarterly dividend. Peer Blackstone Group (NYSE: BX) narrowed its first-quarter loss and was optimistic on economic recovery, but its shares have also lost ground since its earnings release as investors question its prospects.

CAPS members have kept Fortress' rating at no higher than two stars in recent years, which could be for good reason. Recent regulatory filings show it has $5 billion in unrealized losses from private equity funds started since 2005. In CAPS, 72% of the 488 members rating Fortress Investment Group expect it to outperform the broader market.

Coinstar
Coinstar's shares have lost steam following a big run earlier this year as the company lowered its second-quarter outlook late in May and also offloaded its E-Payment services business. Although the company renewed a deal with Paramount to rent its movies from its Redbox kiosks the same day they're released for sale, competitor Netflix (Nasdaq: NFLX) is moving deeper into streaming movies, making some investors nervous.

While competitor Blockbuster (NYSE: BBI) is struggling as it looks to restructure its debt load in or out of bankruptcy, Coinstar keeps showing strength as it moves forward with testing game rentals in its Redbox kiosks in more markets.

Some CAPS members have grown concerned about Redbox's future in a digital world, but Coinstar is a feisty one and may be looking to turn the tables on Netflix in the streaming business. Overall, 86% of the 367 CAPS members rating Coinstar expect it to beat the S&P.  

Exelixis
Earlier this year, Exelixis said it would trim costs through job cuts and focus its efforts on developing cancer drugs through partnerships with sanofi-aventis and Bristol-Myers Squibb (NYSE: BMY). It sounded like a good plan at the time, but one part has unraveled after Bristol-Myers ended its partnership with Exelixis, leaving Exelixis to go it alone or seek another partner for its thyroid cancer candidate XL184.

The company's CAPS rating has ticked down to four stars, but a few members think there's a good opportunity in the cheaper shares; 96% of the 2,480 CAPS members rating Exelixis see the stock outperforming the general market.

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 165,000-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.