Yesterday's Biggest Stock Stars

Here at the Fool, we usually don't pay attention to day-to-day price gyrations. Instead, we prefer to track each business' intrinsic value, which, by its very nature, changes a lot less frequently than Mr. Market's wild swings would have you believe.    

But at times, some price moves are just so big that investors should at least take notice -- especially when we Fools could have seen them coming.

The big winners  
With that in mind, I've summoned our Motley Fool CAPS community to highlight yesterday's biggest five-star stock gainers (a five-star rating is the highest any stock can receive). Also, I've included a possible explanation -- where I could find one, of course -- for each move.

So, without further ado:

Did CAPS prophesize the rise?
The reason I selected the biggest five-star gainers, as opposed to the market's biggest overall winners, is simple: Stocks go up all the time, but the important thing is being able to predict the move beforehand.

Through a consensus of more than 60,000 Fools in our CAPS community, five-star stocks are the ones that our database believes will most likely outperform the market. By reverse-engineering some of the arguments made for these picks, our odds of finding the next big winner will surely improve.

For example, back in January, CAPS All-Star Hoglum mentioned Aluminum Corp.'s dividend and bargain-basement valuation as a "no-brainer" way to beat the market. Here's the sweet call:

They have a payout ratio of 44.6% which yields a 5.6% dividend. That's some fine icing on this growth. Considering all this, I'm surprised to see a low P/E of 7.94. This should outperform without much of a problem. Perhaps Chinese stocks will be getting bubbly soon but I certainly don't see it here. Not yet.

Now for the losers
Of course, winning isn't everything in the stock market. Stocks go down, too -- and oftentimes very, very fast.

Here are yesterday's biggest one-star decliners:  

Did CAPS call the fall?
Whereas Fools believe five-star stocks will outperform, one-star stocks are the investments that our CAPS community predicts will lag the market. By investigating a few of the underperform arguments made for these losers, we should have a much better chance of averting portfolio disaster in the future.  

For example, just last week, CAPS All-Star TMFBreakerJava -- following another sharp Fool's lead -- virtually prophesized Neurochem's exact fate:

I am following TMFBreakerCharly in rating this one to lag the market. Charly's thesis is that their drug Alzhemed has failed in trials and they are trying to come up with a better outcome using post-hoc analysis. This is a tactic that does drug companies no good at all in getting drugs approved, though it may temporarily take some of the sting out when an expensive project turns out badly.

The final Foolish move
Investors often focus strictly on stock price movements (or the results), without realizing that developing a correct process is what really counts most.

Over at Motley Fool CAPS, more than 60,000 investors are Foolishly sharing insightful investment ideas and tips to help identify tomorrow's big winners and losers. Over time, consistently reverse-engineering the winning pitches will certainly help you in becoming a better (and more Foolish!) investor.

So, log in to CAPS today. It's absolutely free.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Huaneng Power is a Motley Fool Rule Breakers recommendation. The Fool has a disclosure policy.