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 Celldex Therapeutics got hammered for a 26% loss last Friday after Pfizer backed out of a development deal for the company's brain cancer drug candidate.

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 15% in the last four weeks, and they have a market cap greater than $100 million and a beta of less than three.

Source: Motley Fool CAPS. Price return Aug. 13 through Sept. 8.

Winn-Dixie
Winn-Dixie has tried to keep the promotions to a minimum to bolster gross margins in the highly competitive grocery environment, but with heavy price competition from others like Wal-Mart Stores (NYSE: WMT), the company has succumbed to beefing up its promotional activity to keep market share from dwindling. It's not alone as even high-end food retailer Whole Foods (Nasdaq: WFMI) has cut prices and increased promotions to lure in more shoppers. Still, investors disappointed with Winn-Dixie's struggling same-store sales and potentially weaker profits have sold off its shares, and CAPS members are keeping an overall cautious outlook with a paltry two-star rating. Overall, about 81% of the 184 CAPS members rating Winn-Dixie remain bullish on its prospects to beat the broader market.   

China Sky One Medical
After a strong rise in second-quarter sales and earnings reported last month, over-the-counter drug maker China Sky One Medical slashed its 2010 guidance on Friday after several of its major distributors terminated their contracts. The distributors didn't like the increased financial scrutiny from Chinese authorities due to China Sky One disclosing some information about them in U.S. Securities and Exchange Commission filings as required by the Securities and Exchange Commission. The news was another blow to an already bad 2010 performance for the stock, and now more investors are questioning whether there's serious fire behind the smoke billowing around many players in the Chinese nutritional supplements industry. The stock still sports a four-star CAPS rating, but more than a few members have noted their cautious approach to the Chinese small cap. Still, 95% of the 642 members rating the company expect a market-beating performance from shares.

Universal Travel Group
Part of Universal Travel's explosive second-quarter revenue growth came from lower-margin, newly acquired businesses, and shares took a 13% hit after a Brean Murray analyst cut the stock's rating, citing deteriorating margins and changes looming in the airline industry. But many CAPS members see a bargain opportunity in Universal's shares, which trade at an earnings multiple of about four compared to an earnings multiple of 50 for peer Ctrip.com (Nasdaq: CTRP). Universal Travel expects margins to improve as it integrates the new businesses and sees potential strengthening of its hotel business with its new partnership with priceline.com's (Nasdaq: PCLN) fast-growing Agoda service. While the opinions are mixed, the crowd is not with just shy of 97% of the 315 CAPS members rating Universal Travel Group expect it to outperform the broader 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.