Monday's Biggest Stock Stars

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

Without further ado:

There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Monday, such as low-rated automaker Ford (NYSE: F). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 100,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proved its market-beating prowess: Over its first year, top-rated stocks returned roughly 28%.

Written in the (five) stars?
For example, out of the 172 CAPS All-Stars who've rated William Wrigley, only two have a bearish opinion. Fueled by that Foolish support, the venerable Chicago-based chewing gum giant has kept a four- or five-star rating for more than six months straight.

Last November, CAPS player lzrichards gave our community a little something to chew on:

Wrigley is very well positioned in the global markets. Their earnings have been steady and growing. ... They are the big kid on the block, with not much fear of anyone else competing with them. Remember, consistent earnings, stock dividends, and stock splits have earned this stock as a long time keeper.

As if to echo that bullish sentiment, shares of Wrigley popped yesterday after fellow candy maker Mars, with financing from none other than Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), offered to buy the company for roughly $23 billion in cash.

The bullish lesson?
Always put a heavy weight on certainty. When you do that, you'll naturally gravitate to simple (even boring) companies selling stable consumer products that pay out real cash and will likely be around "forever." In Buffett's own words, "I look for businesses in which I think I can predict what they're going to look like in 10 to 15 years' time. Take Wrigley's chewing gum. I don't think the Internet is going to change how people chew gum."

And now for the losers ...
Of course, winning isn't everything in the stock market.

Here are Monday's biggest one-star decliners:  

One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated fertilizer stocks Potash and Mosaic may have caught our community off-guard, one-star stocks are fully expected to fall hard. In the first year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Just two weeks ago, for instance, CAPS All-Star TMFShakespeare questioned Radio Shack's seemingly outdated business model: "There is no electronic good for sale at Radio Shack that you need to feel in your hand before purchasing, so why take the stroll out to the strip mall when there are dozens of online competitors with the same products available? The only exception may be the cell phones, and each carrier has their own kiosk (often in near proximity)."

Not surprisingly, shares of the electronic retailer fell yesterday after posting a 9% first-quarter profit decline, as results were hurt by weak sales in its Sprint wireless business -- exactly as TMFShakespeare had warned.

The bearish takeaway?
Again, learn to put a heavy weight on certainty! Even though the Internet hasn't changed how we chew gum, it definitely has changed the way people shop for various gizmos and gadgets. As the Fool's own TMFShakespeare understands, buying into a feeble bricks-and-mortar electronics retailer -- in a world full of online and "big-box" alternatives -- isn't exactly the best way to make money.

The final Foolish move
Investors often focus strictly on stock price movements 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, above all else, 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!