3 Stocks in a Tailspin

Individual stocks can rise 10%, 25%, or even higher in a short time. And they can fall just as far, just as quickly. For example, shares of Mellanox Technologies lost nearly a third of their value last Thursday after the fabless semiconductor company provided a weak outlook for third-quarter 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 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 20% 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 2 through July 27.

Great Atlantic & Pacific Tea
While Kroger (NYSE: KR) has been able to gain market share amid steep price competition from Wal-Mart, others haven't fared as well. Safeway (NYSE: SWY) cut its full-year outlook because of continuing deflation in grocery prices, and SUPERVALU (NYSE: SVU) announced falling same-store sales for its fiscal first quarter. Great Atlantic & Pacific Tea Co.'s recent quarterly results have sent some investors fleeing as it doubled its loss from continuing operations compared with the year-ago quarter and called on its second CEO in a year to turn things around. The pessimism surrounding the grocery sector has some CAPS members looking to pick up some beaten-down shares. But enough members remain bearish to keep Great Atlantic & Pacific Tea Co.'s rating in CAPS stuck at two stars, with a lukewarm 69% of the 284 members rating it expecting it to outperform the broader market.

Global Cash Access
ATM and cash access provider Global Cash Access recently announced that its largest customer, Harrah's, won't renew its contract at the end of November, which sent shares off a cliff to the tune of a 40% loss. Harrah's made up about 14% of Global Cash Access's 2009 revenue, but some CAPS members smell opportunity and are looking to catch a bounce. The company still holds a strong position in the ATM and cash access business in the gaming industry, even without its top customer. Today, nearly 84% of the 166 CAPS members rating Global Cash Access are bullish on what they see as an unfairly beaten- down stock.

VIVUS
Many investors have been betting on performance with VIVUS and its weight loss drug candidate Qnexa. But it looks like having the most effective candidate among itself and competitors Arena Pharmaceuticals (Nasdaq: ARNA) and Orexigen Pharmaceuticals may not be enough for the company. Recently, a Food and Drug Administration panel recommended against Qnexa's approval because of safety concerns. While a full decision is expected on Qnexa before Oct. 28, many investors have been shifting their bets to Arena Pharmaceuticals, whose lorcaserin is up for review later this year and has a safer profile. Despite the recent setback, 89% of the 358 CAPS members rating VIVUS still 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 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.