Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Friday's biggest winners among the stocks with a top rating of four or five stars.
Without further ado:
|
Company
|
Friday's Gain
|
|
Patriot Coal (NYSE: PCX )
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21.90%
|
|
Frontline (NYSE: FRO )
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14.75%
|
|
Alpha Natural Resources (NYSE: ANR )
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14.11%
|
|
TBS International
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13.11%
|
|
Arch Coal
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11.60%
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There's a reason why I selected those notable gainers, as opposed to other winners making noise on Friday, like low-rated DryShips. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?
Our community of more than 130,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.
Written in the (five) stars?
For example, 98.1% of the 211 All-Star members who've rated Patriot Coal have a bullish opinion of the stock. Two weeks ago, one of those Fools, devilinside, explained why the coal producer would keep it in the black. Here's an excerpt:
Patriot Coal is poised to go far once this economy turns around. They seem to have their debt under control and enough cash flow to keep them going until things do turn around. They have reduced production and are quickly reducing inventories. No industrial nation can grow without coal.
Consistent with that call, shares of Patriot surged Friday after posting a first-quarter profit of $32.1 million on higher prices and cost cutting, which helped ease Wall Street's liquidity concerns for the time being.
The bullish lesson?
Learn to be greedy when others are fearful. As long as you've done your homework and are absolutely convinced of a company's long-term earning power, a bit of worry from Mr. Market can create perfect buying opportunities. Like Warren Buffett once said, "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."
And now for the losers ...
Of course, winning isn't everything in the stock market.
Here are five of Friday's biggest decliners with a one- or two-star rating:
|
Company
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Friday's Loss
|
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Washington Post Co. (NYSE: WPO )
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12.59%
|
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Hartford Financial (NYSE: HIG )
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7.93%
|
|
MetLife
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7.73%
|
|
MGM Mirage
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6.21%
|
|
MasterCard (NYSE: MA )
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5.75%
|
While Friday's drop in highly rated Celgene may have caught our community off guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
In August, for instance, CAPS member dwhit110 circulated these bearish thoughts on Washington Post:
Newspapers as a medium are dying. The business model that turned [Washington Post] into a fantastic stock in the 20th century is built off consumer insights that are no longer true. [Washington Post] must adapt to go on.
In line with that warning, shares of Washington Post sank Friday after reporting a first-quarter loss, as ad revenue at its namesake newspaper fell 33%.
The bearish takeaway?
Always beware of "buggy whips" disguised as bargains. As Warren Buffett put it during this past weekend's Berkshire Hathaway (NYSE: BRK-A ) annual meeting, "For most newspapers in the United States, we would not buy them at any price." Buffett continued: "They have the possibility of nearly unending losses. ... I do not see anything on the horizon that sees that erosion coming to an end."
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!
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