Tuesday'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' 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 rating of five stars.

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 volume leaders -- like Commerce Bancorp (NYSE:CBH) and ExxonMobil (NYSE:XOM) -- 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, Yingli Green Energy, a China-based producer of solar products, has had more than 120 CAPS All-Stars call "outperform" on its stock, while a mere two of them have been bears.

This outperform pitch -- pulled from Yingli's CAPS page -- gives us an idea of what all the hubbub has been about:

Lowest price (P/E) and one of the highest profit margins in a hot industry. Cheap labor and the promise of a production line that will triple in the next year or two spells one word: BUY!

Since CAPS All-Star TheWhiteHawk made that call less than two months ago, YGE has returned an unbelievable 112%.

The bullish takeaway? It's no secret that buying cheap stocks can reap sweet rewards. But on the rare occasion that an industry's cheapest stock just happens to be its most profitable one, too, then you might be sitting on an explosive opportunity.

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

Here are yesterday'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'll have a better chance of averting portfolio disaster in the future.  

Take, for instance, this Aventine Renewable Energy underperform pitch found in CAPS:

Ethanol isn't going to catch on. Ethanol doesn't have the energy content of gas and the U.S. is doing a great job of moving in a different direction with the benefits via taxes, etc. of going with hybrid cars. The infrastructure isn't there for another liquid fuel to be distributed, therefore, just like hydrogen cars, you aren't going to see any groundwork laid anytime soon.

The Illinois-based ethanol producer is down 50% since CAPS player Wifeb123 penned that pitch last May.

The bearish lesson? Beware of the next "big thing" and always play the odds. Though it's certainly possible to make money speculating on world-changing technologies early in their development, most of the time, it's just not a good bet to take.  

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!