Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Thursday's biggest winners among the stocks with top ratings of four or five stars.
Without further ado:
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Company
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Yesterday's % Gain
|
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Intuitive Surgical (Nasdaq: ISRG )
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26.84%
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Celgene (Nasdaq: CELG )
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18.63%
|
|
Mechel
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12.93%
|
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Manitowoc
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9.52%
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|
PotashCorp
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7.70%
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There's a reason why I selected those notable gainers as opposed to other winners making noise on Thursday, like low-rated 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 135,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.
Written in the (five) stars?
For example, 97.5% of the 1,214 All-Star members who've rated Intuitive Surgical have a bullish opinion of the stock. In March, one of those Fools, my colleague Dave Mock (TMFBeachBum), helped our community dissect the surgical robot maker:
There's just too much to like about [Intuitive] at this price. Near-term pressure on system sales will eventually ease, as the economics for hospitals are too compelling. In the meantime, recurring revenue keeps things humming along as the company continues to develop new opportunities.
Shares of Intuitive are already up an amazing 149% since that call. In fact, yesterday's 27% surge came after the company posted quarterly sales and profit growth that handily topped Wall Street's estimates -- consistent with Dave's bull pitch.
The bullish lesson?
Learn to combine the best of both value and growth investing worlds. By seeking rapidly growing companies at cheap prices, you not only buy into a stock trading below its fair value today, but also own a business that can increase that value tomorrow. As Warren Buffett reminds us: "Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher five, 10, and 20 years from now."
And now for the losers ...
Of course, winning isn't everything in the stock market.
Here are five of Thursday's biggest decliners with one- or two-star ratings:
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Company
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Yesterday's % Loss
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PNC Financial
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4.33%
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Moody's (NYSE: MCO )
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3.77%
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AIG (NYSE: AIG )
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3.51%
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Gap
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2.78%
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|
Sprint Nextel
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2.51%
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While yesterday's drop in highly rated McDonald's (NYSE: MCD ) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
Last month, for instance, CAPS All-Star hodg1181 refused to give Moody's any more credit: "Their reputation was all they had. They've lost that and will now be subject to greater competition. The only reason analysts use the rating agencies at all is they are forced to through fiduciary responsibility."
Shares of the embattled credit rating agency are already down 13% since that call. In fact, yesterday's market-bucking loss came on news that Warren Buffett's Berkshire Hathaway (NYSE: BRK-A ) cut its long-held stake in the company by almost 8 million shares.
The bearish takeaway?
Learn to regulate your regulatory risks. Investing in high-return oligopolies can be wise, but if public sentiment ever turns against your business, a change in regulation could dramatically hurt its ability to stay strong. As CAPS' hodg1181 understands, unless you're willing to consider all of the possible ways your stock might get killed -- both in the short and the long run -- there's a good chance you'll wake up one day and get blindsided.
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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