Thursday's Biggest Stock Stars

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

Company	Yesterday's % Gain
Hurco (Nasdaq: HURC)	33.16%
Chart Industries	18.80%
Gulf Island Fabrication (Nasdaq: GIFI)	9.91%
Brigham Exploration	9.62%
Health Grades (Nasdaq: HGRD)	9.27%

There's a simple reason I selected the largest five-star gainers, as opposed to other big-name winners making noise on Thursday, such as one-star stock salesforce.com (NYSE: CRM): Stocks go up all the time, but unless you were able to predict the pop, what does it matter?   

Our community of more than 85,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. So far, CAPS has indeed proved its market-beating prowess: Over the past year, top-rated stocks have returned roughly 28%.

Written in the (five) stars?
For example, out of 350 CAPS All-Stars who've rated Motley Fool Hidden Gems pick Hurco, a measly three have a bearish opinion. On the back of that strong Foolish support, the producer of computer systems for the metal-working industry has kept a perfect rating for more than six months straight.

Two weeks ago, CAPS player DavidBear even highlighted Hurco's international flavor: "The company is continuing to expand into Asia (India and China), and their advanced software should be a continued selling point for their products. ... Since much of their market is non-domestic, the weakened U.S. dollar should help them and the ever looming U.S. recession should not hurt them as much as others."

Hurco is already up 34% since that call. Of course, virtually all of that gain came yesterday, after management posted a whopping 44% increase in first-quarter profit. The slumping U.S. dollar helped boost European and Asian sales -- just as CAPS' DavidBear had predicted.    

The bullish takeaway?
Diversify away from the dollar. If you're troubled by the ever-falling greenback, buying into strong multinationals that have strong cash flows and are denominated in even stronger currencies is a great way to protect your portfolio. As Warren Buffett said recently, "If our current account deficit keeps running at present levels, the dollar, I think, is almost certain to be worth less five to 10 years from now compared to other major currencies."

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

Company	Yesterday's % Loss
R.H. Donnelley (NYSE: RHD)	47.53%
Borland Software (Nasdaq: BORL)	24.90%
Thornburg Mortgage	15.42%
Meruelo Maddux Properties	14.91%
HSWI International	13.45%

One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated Cogent (Nasdaq: COGT) may have caught our community off-guard, one-star stocks are fully expected to fall hard. Over the pst year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
In late 2006, for instance, CAPS player eldetorre turned bearish on Borland Software's business model:  

Borland was a great little company that made very nice IDEs for software development. I cut my teeth on Delphi. What killed Borland (yeah they're dead) was the move by the world towards web apps and their half baked move to Linux. A bigger commitment would have been much better.

Shares of the Texas-based software and consulting company have fallen 63% since that call. In fact, yesterday's 25% plunge came after the company reported a fourth-quarter loss of $41.7 million and issued 2008 revenue guidance below consensus -- consistent with eldetorre's gloomy outlook.

The bearish lesson?
Make sure the (business) trend is your friend. For market-beating returns, it's crucial that you position your portfolio to take advantage of massive shifts in commerce, rather than struggle against where the world is headed. In Wayne Gretzky's words, "Skate to where the puck is going, not to where it's been."

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 and start participating. It's absolutely free -- and a lot of fun!