5 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, Overstock.com’s (NASDAQ:OSTK) shares fell 41% after meeting lofty expectations with less-than-stellar second-quarter results.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks after a long run-up. 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 110,000 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.

Here's a sample of stocks our CAPS screen returned:

Source: Motley Fool CAPS. Price return from June 27 through July 25.

Canadian Solar
Chinese solar firm Canadian Solar‘s exposure to regions that are heavily subsidizing solar products has had investors on edge lately. Germany brought good tidings when it moved to cut solar subsidies less severely than many had expected, calming investors’ worries. But the jury is still out on Spain's potential move to cap its solar subsidies and how that will affect the solar industry. With about 15% of Canadian Solar’s revenue coming from Spain, its exposure is significant -- and higher than that of competitors like First Solar (NASDAQ:FSLR). In the meantime, a new share offering has been pressuring shares, as well. As such, a less-than-overwhelming 85% of the 951 CAPS members rating Canadian Solar expect it to outperform the market.

James River Coal
Strong momentum propelled stock in James River Coal to five-bagger status in less than six months after 2008 began, but shares have since eased more than 30% as coal futures have fallen. However, many investors still see big demand for coal, particularly from developing nations -- even with prices at record levels. And some see the recent sell-offs in monster coal stocks like James River making for some good bargains. A good portion of CAPS members are hedging on James River, though, noting that the high prices leave plenty of room to fall if commodity markets turn. Still, 85% of the 515 members rating James River Coal believe it will outpace the S&P.

Capstone Turbine
Alternative power play Capstone Turbine produces low-maintenance, low-emission microturbines in various green energy applications. The product line and growth potential have many investors excited, but some are wary of the firm's continuing losses. Bulls, however, point to a supposed slip by Capstone's CEO regarding a huge boost in this year’s sales numbers, which would mean a big production increase compared to the average growth it has recently experienced in revenue. Profits or not, out of the 522 CAPS members rating Capstone Turbine, 473 expect the firm to outperform the market.

Frontier Oil
The boom in prices for various commodities isn't always good news for stocks further down the value chain. When crude oil rises faster than gas prices, like it has in the past year, profits of oil refiners like Frontier can drop, along with the share price. With little pricing power, a few more CAPS members are growing bearish on Frontier, though 96% of those rating the company in CAPS expect it to beat the market going forward.

Atwood Oceanics
One stock that still has overwhelming bullish sentiment is offshore oil and gas driller Atwood Oceanics. As contracts keep coming in, Atwood is commanding higher dayrates on its rigs. And as the company continues to bring in more rig capacity, many investors can't help but get a little giddy about the recent sell-off in shares of drilling firms like Atwood. A near-unanimous 1,447 of the 1,462 CAPS members rating Atwood Oceanics still see it outperforming the market.

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 5,500 stocks that 110,000-plus members have covered in Motley Fool CAPS.