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. Consider the 46% drop in shares of gold miner Crystallex International (AMEX: KRY) the day investors learned that Venezuela had denied the company permission to carry out exploration of the Las Cristinas mine.

Big drops in share price can signal material defects or new risk, 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 investors' opinions 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 100,000 CAPS investors to make better decisions.

To put this approach into practice, we'll screen for stocks that have been slashed by at least 20% in the past month and that have a market cap of greater than $100 million and a beta of less than 3. That'll keep us out of the mud-filled world of gyrating penny stocks.

Here's a sample of stocks our screen returned.

Let's add a little color to recent circumstances and find out why some of these stocks have been beaten so badly.

Getting hosed
A lot has already been said about one of the worst days in a long time for apparel maker Gildan Activewear. A bearish outlook on 2008 that came with its latest earnings announcement was enough reason for many investors to abandon shares of the Canadian undergarment and hosiery maker. It's hard to blame them, since the company has cut full-year earnings expectations by 21% since just this past January.

But here's a great example of how CAPS can be a valuable tool for investors looking for new stock ideas. The haircut in shares of Gildan has brought out a lot of bullish sentiment on the company, with some investors seeing a great value in a cheaper stock price. Since much of the earnings shortfall Gildan expects this year is from its own operational goofs, the company has the opportunity to fix the problems rather than simply yield to market forces outside its control.

Expanding beyond its lead in wholesale markets into retail segments, with product sales through Wal-Mart (NYSE: WMT) and other similar stores, has many investors intrigued with Gildan's growth prospects as well. Even the recent operational issues haven't shaken the company's five-star rank in CAPS. In fact, all 74 All-Star investors rating Gildan believe it will beat the market in the future -- there's not a bear in the bunch.

This Pantry is a gas
Another company getting socked after bracing investors for some bad news is convenience-store operator The Pantry. But in this case, The Pantry is blaming the usual macroeconomic factors for its reduced outlook for quarterly earnings -- higher gas prices and falling consumer sentiment. The company gave notice that it saw a 3.4% decline in same-store sales in the first calendar quarter of 2008, as it took a hit from rising gasoline prices despite hedging contracts.

The setback comes as the company has been taking on more debt to expand its operations and consolidate is brand across all stores. Now that sales are softening, the company will be cutting $20 million out of its 2008 capital expense plan. CAPS investors are more divided on whether The Pantry will weather this latest storm, however: More than 11% of investors rating the company believe it will underperform the S&P going forward.

Whether you believe the reasoning behind a fall in any stock, your own research is more important than collective opinions. Still, CAPS can 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 5,600 stocks that 100,000-plus investors 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.