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's intrinsic value, which, by its very nature, changes a lot less frequently than Mr. Market's wild swings would have you believe.    

But 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 CAPS rating of five stars. I've also included a possible explanation -- where I could find one, of course -- for each move.

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 unless you were able predict the pop beforehand, what does it matter? 

Through a consensus of more than 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, Motley Fool Rule Breakers newsletter recommendation Applix -- a software provider that agreed yesterday to be  acquired by Canadian-based Cognos  -- has been a five-star stock for the past four months. The bullish sentiment for Applix centers around its highly regarded business intelligence software, above-average returns on equity, low valuation, and cash-hoarding balance sheet. It should come as no surprise, then, that it was gobbled up by a bigger fish.

In fact, just two months ago, CAPS player jazzysav virtually prophesied the buyout, reminding us to always take the prospective of a business owner, rather than a stock trader:

I love companies that exceed their customer's expectations. It's the single formula that drives loyalty and sustained revenues. If you list the companies whose product you absolutely love, chances are their stock has done well also. Applix have created The Loyalty Effect in their customer base which is a great starting point should one of the software giants turn their beady eyes toward their corner of the business world.

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 inspire the least confidence from our CAPS community. By investigating a few of the bearish arguments made for these losers, we should have a better chance of averting portfolio disaster in the future.  

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

Sorry, but I believe that China and the U.S. are getting into a low-grade economic war, and Tyson just got fragged. China just banned meat from several U.S. meat producers -- Tyson being one of them. While everyone is looking at bad ingredients in pet food and meats, I believe that these are just spin on the opening shots over economic resources.

Tyson's stock is down 20% since CAPS All-Star angusthermopylae penned that bear call in July. In addition to the Chinese concerns addressed in the pitch, rising cattle prices and a disruption in beef exports to South Korea all contributed to yesterday's lowered guidance.

To be fair, Tyson remains the largest meat producer in the U.S., but when Asian giants are continuing to close their doors -- all while input costs are running rampant -- it doesn't exactly bode well for business (or investors).    

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!