Thursday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community members once again to highlight Thursday's biggest gainers among the stocks with a top rating of five stars.

Without further ado:

There's a reason I selected the largest five-star gainers instead of other big-name winners making noise on Thursday, like Countrywide Financial (NYSE: CFC). Stocks go up all the time, but unless you predict the pop, what does it matter?   

Our community of more than 80,000 CAPS Fools considers its five-star stocks the ones most likely to outperform the market. And so far, CAPS has indeed proven its market-beating prowess: Over the past year, top-rated stocks have returned roughly 28%.

Written in the (five) stars?
For example, of the 251 CAPS players who rated Amerigon, a whopping 96% of them are bullish. And all three Wall Street firms on CAPS that cover the Michigan-based producer of climate-controlled seats -- Roth Capital, KeyBanc, and Northland Securities -- also like it to outperform.

This bull pitch -- by CAPS All-Star Piznit in late February -- highlighted Amerigon's rather mundane market-beating qualities:

Big time growth projections, and as the Fool loves to point out in good stocks, is in an industry that is obscure and boring. They make heated seats for your bum! Has been on a good run since I began watching it, beating out the S&P by 10%, and will continue to do so.

Amerigon is up an awesome 95% since that call.  

The bullish takeaway? Boring stories can turn into the market's most exciting returns. Often, investing in technology that simply improves everyday products can be a safe way to capture massive growth. And if the company already has big-time customers signed up -- as Amerigon has with giants Ford (NYSE: F), Toyota, and Hyundai -- your chances of success are that much higher.  

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are Thursday's biggest one-star decliners:   

One-star stocks inspire the least confidence from our CAPS players. Yesterday's drop in five-star stock Synaptics (Nasdaq: SYNA) might have caught our community off guard, but one-star stocks are expected to fall hard. Over the past year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Take, for instance, this Ann Taylor Stores bear call -- by CAPS All-Star NeroSagetrade -- from last October:

Credit crunches and rising mortgage rates, as well as overall economic uncertainty are really scaring the consumer away from these higher brand names. I expect earnings estimates to fall here and fall rapidly. That long-term uptrend will easily break within six months as I see little chance for this to outperform in this environment.

The New York-based retailer of specialty women's apparel is down 35% since that pitch just three months ago. In fact, yesterday's drop came after the company reported a December same-store sales decline of 9.4% and lowered its 2007 guidance due to the nasty retail slump -- just as NeroSagetrade had predicted.  

The bearish lesson? Get to know your environment. We Fools don't necessarily advocate a top-down approach to picking stocks, but it's beneficial to figure out, ahead of time, if a company is especially vulnerable in times of economic uncertainty. When consumers get squeezed, they generally tend to cut buying premium, brand-name, non-essential items first, so you might do well to avoid those stocks if you feel a downturn coming.  

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 the winning -- and losing -- stocks will help you become a more Foolish investor.

Log in to CAPS today and start participating. It's absolutely free -- and a lot of fun!