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 gainers among the stocks with a top rating of five stars. Also, I've included a possible explanation -- where I could find one, of course -- for each move.
So, without further ado:
|
Company
|
Yesterday's
% Gain
|
Probable Catalyst
for Move
|
|
Limco-Piedmont
(Nasdaq: LIMC )
|
10%
|
Analyst upgrade
|
|
Endeavour Silver
(AMEX: EXK )
|
9.07%
|
N/A
|
|
Alvarion
(Nasdaq: ALVR )
|
8.41%
|
Signed major client
for WiMax services
|
|
Dawson
Geophysical
(Nasdaq: DWSN )
|
8.31%
|
N/A
|
|
VASCO Data Security International
(Nasdaq: VDSI )
|
8.24%
|
Signed new agreement
with a leading IT distributor
|
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 unless you were able predict the pop beforehand, what does it matter?
Through a consensus of over 60,000 Fools in CAPS, our community considers its five-star stocks the most likely to 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, Alvarion, an Israeli provider of wireless broadband, has always had big bullish support from our CAPS community, owning no less than a four-star rating for the past six months. Specifically, CAPS players are intrigued about the company's WiMAX technology, which happens to be the most widely deployed WiMAX system in the world.
This outperform pitch -- written by morton2002 back in January -- shows how a little techie knowledge can go a long (and profitable) way:
WiMAX has the biggest short-term impact on emerging markets with poor copper/fiber infrastructure but strong GDP growth potential. Alvarion has worldwide market penetration and is a recognized brand. In the longer term their experience will keep them ahead of new competition from potential late-comers like Cisco.
The stock is up a whopping 79% since that call was made.
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:
|
Company
|
Yesterday's % Loss
|
Probable Catalyst for Move
|
|
Hooper Holmes (AMEX: HH )
|
(8.97%)
|
N/A
|
|
MIVA (Nasdaq: MIVA )
|
(6.89%)
|
N/A
|
|
Dillard's (NYSE: DDS )
|
(6.87%)
|
Analyst price target cut
|
Did CAPS call the fall?
Whereas Fools believe five-star stocks will outperform, one-star stocks inspire the least confidence from our CAPS community. By investigating a few of the bearish arguments made for these losers, we should have a much better chance of averting portfolio disaster in the future.
Take, for instance, this Dillard's underperform pitch found in CAPS:
The company has hardly delivered revenue growth in the past five years. On and on, the company seems to be a slowcoach as compared to other aggressive players like J.C Penney and Federated [now known as Macy's Inc.], which are taking strong initiatives to speedup their growth prospects. ... Hence, DDS does not quite impress from an investment point of view.
Dillard's stock is down 37% since NetscribeRetail penned that bear call in April, reminding us Fools to always pay attention to a business' competitive landscape. Dillard's CAPS page is showered with pitches that highlight its lack of moat, declining margins, and nonexistent top-line growth, so investors would have had plenty of good reasons to stay away.
The final Foolish move
Investors often focus strictly on stock price movements (or the results), without realizing that developing a proper stock-picking process counts most.
Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment tips to help identify tomorrow's big movers. Over time, consistently reverse-engineering winning (and losing) stocks will help you become a more Foolish investor.
Log in to CAPS today. It's absolutely free -- and a lot of fun!
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