5 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 Ford shed 25% of their value one day last week when investors saw little hope for the proposed $25 billion bailout.         

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 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 120,000 CAPS members to make better decisions.

We've used CAPS' handy stock screening tool to quickly zero in on companies whose prices have fallen at least 35% in the past four weeks, and that 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 Oct. 31 through Nov. 24.

Fortress Investment Group
As more investors continue to pull money out of hedge funds, even good companies are experiencing strong selling and price declines. On the losing end, though, are hedge funds like Fortress, which reported a third-quarter net loss of $57.4 million, compared with a loss of $37.6 million a year ago. One Citigroup analyst warns that the company could violate a debt covenant in 2009 if it doesn't reduce its current $675 million debt load. Today, only 57% of the 403 CAPS members rating Fortress expect it to outperform the market.

Citigroup
Citigroup's shares tanked last week, dropping its market cap below that of US Bancorp (NYSE:USB), which has about a tenth of the assets. Investors feared that the $25 billion injected by the government last month wouldn't be enough -- and they were right. The new government plan announced on Monday guarantees about $300 billion of Citi's assets and injects additional capital.

Some feel the bank was adequately capitalized, but the fresh money prevents a run on the bank that could have had a bad effect worldwide. At this point, 78% of the 6,962 CAPS members rating Citigroup expect it to outperform the market.

Baidu.com
Leading Chinese search company Baidu.com continued to show strong fundamentals despite the decline in its price, with increasing margins and soaring revenues. But the company suffered a black eye after China Central Television reported allegations about it doing business with unlicensed medical companies. While Baidu.com is suspending accounts that make up about 10% to 15% of its revenue, it's also working on rebuilding its reputation. Still, more than 86% of the 3,462 CAPS members rating Baidu.com remain bullish.

Bank of America
After Citigroup's rescue, some wonder who might be next. Companies like JPMorgan Chase (NYSE:JPM) and Bank of America have been increasing their efforts to modify mortgage loans to avoid foreclosures, but with its acquisition of Countrywide, Bank of America has more than $250 billion in residential mortgages that are proving difficult to modify. And it may be a long time -- if ever -- before its premium-price purchase of Merrill Lynch pays off. Many investors remain optimistic, though, with 88% of the 7,070 CAPS members rating Bank of America expecting it to outperform the market.

Ctrip.com
After exceeding Wall Street's expectations for multiple consecutive quarters, Chinese online travel company Ctrip.com finally tripped up and came in just about in line with expectations for the third quarter. Revenue grew 15%, but earnings fell 5% and the company issued fourth-quarter guidance for net revenue growth at less than what analysts wanted to see.

But the company's dominant market position and growth opportunity as China's middle class expands still captivates many investors, and nearly 97% of the 4,349 CAPS members rating Ctrip.com see it beating the S&P.

Ultimately, whether or not you believe a fall in any stock price 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 120,000-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.