Friday's Biggest Stock Stars

We at the Fool usually don't pay attention to day-to-day price gyrations. 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 Friday's biggest gainers among the stocks with a top 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 or even some of the most actively traded stocks -- like Pfizer (NYSE: PFE) and Yahoo! (Nasdaq: YHOO) -- 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 65,000 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, Cynosure, a Massachusetts-based provider of aesthetic laser treatments, has always had strong support from our CAPS community, owning no less than a four-star rating over the past half-year.

This outperform pitch -- found on Cynosure's CAPS page -- explains part of the reason it's been so aesthetically pleasing:  

In addition to Syneron Medical (Nasdaq: ELOS), I think this stock is a good play on an emerging trend. Laser hair removal and aesthetic skin treatments are growing in popularity. The size of the company's main target customer base (baby-boomers, with the resources to spend on vanity treatments) is also growing.

Since CAPS player se7ensparks made that call back in September 2006, CYNO is up an impressive 145%.

The Foolish takeaway? Let the trend be your friend. By identifying specific industries and companies that stand to benefit from major demographic trends, you'll be one step closer to possibly finding a stock with a huge tailwind.

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 Friday's biggest one-star decliners:   

Did CAPS call the fall?
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 Avatar Holdings underperform pitch found in CAPS:   

Going to come a time to put money into home builders. This is not it. I'm going through the entire home builder industry and giving them underperforms in CAPS. I only wish that I had done this a couple of months ago.

Not shockingly, the Florida-based homebuilder is down a depressing 25% since CAPS All-Star KenN513 penned that pitch last July.  

The bearish lesson? Never underestimate the dangers of a bleeding industry. It's good investing practice to search for value in beaten-up sectors, but things oftentimes can get so bad that there's really no value to be had at all. During those times, even the most ardent contrarians need to stay on the sidelines.     

The final Foolish move
Investors often focus strictly on stock price movements (or the results), without realizing that developing a proper process for picking stocks 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!