Monday's Biggest Stock Stars

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

North American Palladium

18.29%

Teck Cominco (NYSE: TCK  )

9.51%

Yamana Gold (NYSE: AUY  )

7.63%

Transocean (NYSE: RIG  )

4.98%

Agrium (NYSE: AGU  )

4.61%

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Monday, like one-star stock UBS (NYSE: UBS  ) . Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 125,000 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, 98% of the 917 members who've rated Teck Cominco have a bullish opinion of the stock. Two weeks ago, one of those Fools, TSIF, explained why the Canadian mining company looked like an attractive proposition:

I'm betting that it's got the leverage and know-how to come up to the surface, into the sunlight. … If coal prices recover OR minerals, then [Teck Cominco] will rebound. If it can't get firm footing then it still has more assets it can break off, but I hope it doesn't come to that. At any rate, bankrupcy isn't likely from my view, and for a chance for a 2-3 bagger, I'll bite.

With the help of yesterday's pop, Teck Cominco is edging the market slightly since that call.

The bullish lesson?
Always be on the hunt for stocks priced for imperfection. It's virtually impossible to call "bottom" on a stock, but if you're confident that the risks are already baked into the price, there's a good chance your investment will turn out well. As legendary value investor Sir John Templeton famously said, "The time of maximum pessimism is the best time to buy."

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

Raser Technologies (NYSE: RZ  )

17.97%

Cougar Biotechnology

16.89%

CBL & Associates Properties

16.38%

Ballard Power Systems

16.09%

Macerich

15.34%

While yesterday's massive plunge in five-star stock Dow Chemical (NYSE: DOW  ) 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?
In late June, for instance, CAPS member bluedome shared these bearish thoughts over Raser Technologies' business model:

This company is all website, no products. I distrust any company that is trying to do two completely different things at once (motors and geothermal energy). Most good businessmen pick one and try to compete!
...
The green blanket can't protect them indefinitely from reality, someone has to give them money to burn.

Not surprisingly, shares of Raser are down 52% since that call.

The bearish takeaway?
Focus on leaders that know how to focus. As long as management insists on diversifying into unrelated industries they know nothing about -- or "diworsification" as Peter Lynch calls it -- companies always run the risk of being distracted away from their core competencies. As Warren Buffett once said, "All too often, we've seen value stagnate in the presence of hubris or boredom that caused the attention span of managers to wander. Would you believe that not a few decades back they were growing shrimp at [Coca-Cola] and exploring for oil at Gillette?"

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.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Dow Chemical is a Motley Fool Income Investor pick. Coca-Cola is a recommendation of Inside Value. The Fool's disclosure policy is always the big winner.


Read/Post Comments (10) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 30, 2008, at 11:50 AM, Malinsky wrote:

    Are Motley Fool or its contributors paid for their commentary? The 2 articles/comments in a row on RZ come at a suspicious time. The company IS selling power and DOES have products.

    The short position on this stock is HUGE and hires companies like Motley Fool EVERY time they feel the sting of the stock rising.

    All other media has been positive and informative, not just a 'quick write' from a hired gun.

    Is Motley Fool compensated for commentary, posts or recommendations.

  • Report this Comment On December 30, 2008, at 12:47 PM, rkornfeld wrote:

    To:

    Brian D. Pacampara and MF

    Again, Motley Fool shows that it is in bed with the short sellers, naked short sellers and those manufacturing counterfeit shares.

    MF's article again is a concerted effort with firms as UBS, Knight Trading and other broker dealers to keep the price down and to drive out retail investors away from the stock whenever RZ posts any good news. The numerous articles each year and the timing of each is simply way, way to suspicious and smells of collusion with certain broker dealers. There is no other service as MF which publishes the number or the negative commentaries attacking RZ.

    Time will tell who stock fraud manipulators are with eventual litigation and discovery which is sure to drag MF directly into the center of it.

    I plan on keeping track of each of its articles and publications as discovery will require it to produce.

    Ultimately the house of cards of naked shorting will fall and MF will be dragged down with it. It's publication and credibility will be dragged down when its collusion with fraudulent dealers is fully discovered. It may take another year but the resolve of many finanicially well suited shareholders at RZ will get to the bottom of this scam by MF's authors.

    For those of you out there who know the true story behind RZ, please keep posting your comments so there is a history of notice to MF that what it is doing is corrupt and inaccurate. Please keep posting your comments on the MF site to give notice to other readers that MF is simply a mouth piece of the naked short sellers.

    RZ will have earnings in 09 but the positives of any company are ignored by MF.

    Further with the thousands and thousands of stocks out there, why is that MF continually focuses on and picks on RZ? Think about it...There is a vested interest here which MF and it's authors fail to disclose. Only the fly on the wall really knows but with time we shall too know.

    MF has an uscrupulous agenda to slam RZ and it fails to disclose what the underlying agenda is.

  • Report this Comment On December 30, 2008, at 3:24 PM, TheCaliforniaKid wrote:

    OK, so I am a pretty new investor, but really? Maybe I am Naïve, but it seems to me that the Motley Fool is "reporting" or showing evidence why their CAPS pickers are right.

    In this case the stock dropped significantly, and someone involved in a service they are promoting picked that drop.

    This seems less about the stock and more about their prescient comments. Sure they could just as easily find a comment from someone high on the stock, but the point is they are touting their accolades, not trying to demolish your stock. Aren't they?

    For a bit I thought the market might move on these articles that have been recommended by all of 3 people too...but that's idiotic. Or maybe I am.

    I might be new, but don't invest emotionally!

  • Report this Comment On December 30, 2008, at 6:29 PM, botanical wrote:

    I notice that "Bluedome" whom you quote in regard to RZ has a member rating under 20 and scores a beanie in CAPs. Is this someone we should really take seriously? I don't think so.

  • Report this Comment On December 30, 2008, at 7:56 PM, cmcgloon wrote:

    Thanks botanical. I totally agree with you. It seems like RZ didn't go down until the article was posted. They do have a product & there are great things in store for this company. Maybe Bluedome should look into it further before spouting off.

  • Report this Comment On December 31, 2008, at 9:31 AM, justmister wrote:

    Something smells of stock bashing to drive down the price for some ‘shorters.’ In what is historically a light trading period on the NYSE, this stock is traded at 10x’s its normal daily volume? At a time when so much great news is hitting the street about Raser Technologies it’s investor’s are dumping it? I find that incredible!

    Raser Technologies is sitting on a gold mine in the geothermal energy business and has positioned itself in exactly the right spot at exactly the right time ! The first of it's plants up and running and within weeks will start delivering electric to Anaheim . Aren't geothermal power plants considered assets? That was Senator Orrin Hatch, R-Utah, Gary Herbert, Utah Lt Governor, and Patrick Delow of Merrill Lynch at the plant’s ribbon cutting ceremony in November, wasn’t it? But, where was Bluedome???

    The company holds rights to 78 square miles of land in the area and believes it has barely tapped the full potential. "We made a pleasant discovery, let's put it that way," said Raser CEO Brent M. Cook. Raser's find "has the potential to become one of the more important geothermal energy developments of the last quarter-century," said Greg Nash, a professor of geothermal exploration at the University of Utah.

    RZ has bumped up its planned development of 10 megawatts of power to 230 megawatts. That is in line with the field's power potential, according to calculations by GeothermEX Inc., a consulting firm. Merrill Lynch & Co. has pledged to fund Raser's first 100 megawatts of projects and says it is staying in the game. "We're very committed to the company," said Merrill Lynch spokeswoman Danielle Robinson.

    Do you see the $$$ yet?

    RZ has locked up property with geothermal fields that offer potentially huge profits. New leases increased their total geothermal holdings to over 300,000 acres in five states with rights to the geothermal resources and certain surface rights for the construction of geothermal wells, piping, power plants and transmission lines.

    Raser and its supplier, UTC Power, plan to build another seven geothermal energy plants across the West by the end of 2009 and 10 plants a year for the next decade.

    And what about President Elect Obama's focus on developing alternative energy in lock-step with his $.7T - $1T stimulus package. Much of this money will be going to develop those alternative energy sources, including geothermal. You do the math.

    Something is STINKING at MF!

  • Report this Comment On December 31, 2008, at 10:09 AM, justmister wrote:

    Just one more comment. MF reports that RZ is down 52% since Bluedome made his comment in June. So what! How about Macy's, Dryships, Bank of America, Goldman Sachs, or a thousand other stocks that are off 52% from their 52-week highs? Should stock holders dump these too?

    Give it a break and choose another company to short-bash. RZ stock holders have paid a high price in the short term but this company is going to the top in a BIG way. IMHO.

  • Report this Comment On January 01, 2009, at 11:54 AM, aeronaut77 wrote:

    I found it intriguing that MF would bash RZ for it's 17% decline on Monday but remain silent about it's 14% rise on Wednesday. Hmmm......

  • Report this Comment On January 01, 2009, at 12:01 PM, aeronaut77 wrote:

    Here it is in a nutshell: RZ's modular geothermal system works just fine. They've got a boatload of development rights secured. Now it's just a matter of showing they have access to capital on acceptable terms. Watch for a significant pre-paid power purchase agreement to be announced in January. RZ will grant a discount on a long-term PPA to a utility that pre-pays a portion of the deal to fund construction of the plant. With that announcement the argument about access to capital goes bye bye.

  • Report this Comment On January 11, 2009, at 7:39 PM, TSIF wrote:

    I have posted in the other thread as well.

    http://www.fool.com/investing/value/2008/12/26/what-to-sell-...

    In this article, the "Not surprisingly, shares of Raser are down 52% since that call" seems stated a little strongly.

    I find it interesting that my own "pitch" on TCK is in this article. Of the stocks listed, well before the article was written I personally own very small, (I'm a very low $$ investor with quite a variety), positions in TCK, PAL, and AGU, three of the five "winners" in the story. The only Loser I have a stake in is Raser. That my biggest holdings are RZ, the "loser", must show that either I got it wrong, or we just need to wait a little bit longer...a very little bit longer....

    Do your own homework my Foolish Friends. Fools needs to fill space and get links in as many stocks as possible on the bulletin boards, use 'em as a starting point, look for other good ideas in the article, and then dig, dig, dig, you might just hit some high value steam!

    Additional thoughts on my blog.

    http://caps.fool.com/Blogs/ViewPost.aspx?bpid=128774&t=0...

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