Wednesday'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 the help of 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 predict the pop?
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 over 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.

Turkcell, for example, has been a Foolish favorite for quite some time. CAPS All-Star MArgersinger explains what I mean in this outperform pitch:

The recent sell-off has created a real bargain in this company's stock price. The strengths of this company have been well-covered on the CAPS boards and in Fool-contributor Will Frankenhoff's great write-up from January 23: "Turkcell: Investors' Best Call." ... The newly minted CEO from Microsoft that is focused on enhancing the company's technology offerings only further validates a solid investment thesis.

The shares are up 35% since this call was made last March, which underscores, yet again, the importance of requiring a reasonable valuation and a strong management team with each of our investments.

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.  

Take, for instance, this AMREP underperform pitch found in CAPS:

This property company is not going to repeat their 300% profit growth, as they won't get a buyer for that much land again that soon. They will purchase a company this spring for $92 million and that will not be good on the books. Short sales are 50% of float. I'll be joining the shorts after Christmas. This stock deserves to be at around $45 ... MAYBE?

AMREP shares are down a startling 74% since CAPS player less1buck penned that call last December, reminding us to be extremely careful about extrapolating recent results way out into the future. Oh, and to watch out for shorting sharks.   

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

Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment ideas and tips to help identify tomorrow's big movers. Over time, consistently reverse-engineering winning (and losing) stocks will certainly help you become a more Foolish investor.

Log in to CAPS today. It's absolutely free.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Turkcell is a Global Gains newsletter recommendation. Posco is an Income Investor selection. The Fool has a disclosure policy.