Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Monday's biggest winners among the stocks with a top rating of five stars.
Without further ado:
|
Company
|
Yesterday's % Gain
|
|
Cameco (NYSE: CCJ )
|
22.50%
|
|
Southern Copper (NYSE: PCU )
|
19.58%
|
|
Alvarion
|
19.41%
|
|
Exelixis (Nasdaq: EXEL )
|
19.17%
|
|
Yamana Gold (NYSE: AUY )
|
17.23%
|
There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Monday, like low-rated Citigroup (NYSE: C ) . Stocks go up all the time, but unless you were able to predict the pop, what does it matter?
Our community of more than 120,000 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: In the first 20 months since its inception in late 2006, five-star stocks beat the market by 12 points, annualized.
Written in the (five) stars?
For example, 97% of the 4,124 CAPS members who've rated Southern Copper have a bullish opinion of the stock. Late last month, one of those Fools, awhill100, explained why the copper giant seemed ready to rebound:
[Southern Copper] is one of the largest copper production companies in the world. ... I say this stock is a double-edged sword because it's trading at market lows right now and it also pays hefty dividends. Once the market recovers this stock will once again go back up providing an additional increase in revenue. You can't ask for anything better.
Consistent with that call, shares of Southern Copper surged yesterday on rising copper prices, as China's refined copper imports rose 15% for October.
The bullish lesson?
It's time to double down on dividends. As long as a company has the financial strength and long-term trends to maintain (and even grow) its dividend payment, a high yield can often be an easy indicator of market-beating returns. As my Foolish colleague Todd Wenning recently wrote, Mr. Market "is providing some great opportunities to buy strong, well-capitalized companies with high dividend yields -- at lower prices."
And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Monday's biggest one-star decliners:
|
Company
|
Yesterday's % Loss
|
|
G-III Apparel
|
7.92%
|
|
Ann Taylor Stores (NYSE: ANN )
|
7.66%
|
|
Hovnanian Enterprises
|
5.58%
|
|
Republic Airways
|
4.93%
|
|
Domino's Pizza
|
4.62%
|
While yesterday's plunge in highly-rated Columbia Sportswear (Nasdaq: COLM ) may have caught our community off-guard, one-star stocks are fully expected to fall hard: Over the 20 months since CAPS started, one-star stocks dropped an average of 11.4%, annualized.
Did CAPS call the fall?
Last week, CAPS member Daretoth shared these bearish thoughts on Ann Taylor:
This is a year long short because of extremely high operating costs, and those are likely to rise as the economy struggles. They don't have any debt which is good, and the P/E isn't awful, so they may recover in the long run but in the short run I foresee name brands clothes struggling with profits.
In line with that prediction, shares of Ann Taylor continued to decline after the women's apparel retailer swung to a third-quarter loss last Friday, socked by a restructuring charge and slumping sales.
The bearish takeaway?
Always know where you're exposed. One of the most common mistakes we make as investors is underestimating how sensitive a business model can be to specific economic and industry-related variables. As CAPS' Daretoth understands, trying to make money with fickle fashion is tough enough as it is, but in a deteriorating consumer climate, it's nearly impossible.
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!
RSS Headlines
Fool UK